USA – CALIFORNIA Trends and Developments Contributed by: Nora Sheriff and Samir Hafez, Buchalter
Buchalter 1000 Wilshire Blvd Ste 1500 Los Angeles CA 90017 USA Tel: +1 213 891 0700 Web: www.buchalter.com
Background Regulators have mapped out ambitious plans to modernise power grids across the USA, but their plans did not account for rising trade barriers, weakening public support, and radical shifts in political and economic headwinds. Power developers are facing a volatile mix, between persistent inflation, recession con- cerns, potential roll-backs of Inflation Reduc- tion Act tax credits, and mounting global supply chain risk – all compounded by a sharp pivot to protectionist trade policy. The industry is already grappling with rising infrastructure costs and slipping timelines, and the on-again, off-again implementation of tariffs is making these pro- curement struggles even worse. The proposed elimination of federal tax credits for renewable and battery storage resources in the Republican tax proposal known as the “One Big Beautiful Bill” is under consideration in the US Senate. Passed by the US House of Representatives on 22 May 2025, the proposal, if enacted, would further add costs and delay many projects, if not halt them entirely. These legal and regulatory uncertainties are altering procurement strategies and reshaping invest- ment decisions, which has made determining which projects to advance, and which to stall, something of a guessing game.
Nowhere are these strains more visible than on the West Coast, where the energy transition depends heavily on the rapid deployment of utility-scale solar, battery storage and high-volt- age transmission. The consequences of these significant uncertainties will reverberate nation- ally, but the Western grid may be the hardest hit in the short-term, as a result of its aggressive policy targets, ratepayer affordability crisis and regional market aspirations, among other newly realised hazards. Tariffs Return in Force, Prompting Supply Chain Reassessment The second Trump administration’s aggressive trade agenda has thrust tariffs back into the cen- tre of US energy policy. Notable actions include: • reimposing and expanding Section 201 tariffs on solar cells and modules, removing exclu- sions for bifacial panels; • tripling Section 301 tariffs on Chinese energy goods, with the average tariff now exceeding 120%; • expanding tariffs on previously exempt equip- ment categories, such as inverters and bat- tery management systems; and • broad-based 10% tariffs on all imports, including from recognised US allies.
354 CHAMBERS.COM
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