The incoming US Republican administration is expected to de-emphasize offshore wind development by restricting permitting resources and limiting new leases, according to new Wood MacKenzie analysis.
However, these impacts will not materially change the 10-year outlook for the country, as almost 25GW of projects under development are already permitted or in the late stages of permitting.
The more significant risk pertains to project economics.
Stephen Maldonado, research analyst at Wood Mackenzie, explained: “If the administration chooses to not issue guidance on the domestic content bonus credit for offshore wind, or pares back the 45X advanced manufacturing tax credit, investments in a domestic supply chain could be significantly delayed.
“While Wood Mackenzie’s base case outlook expects 27GW of cumulative installed capacity by 2033, the compound effects of these constraints could lead to a 30% decrease over the same time frame.”
A second Trump administration also presents significant downside risk to onshore wind, according to the analysis.
Should Congress seek to repeal key mechanisms of the Inflation Reduction Act (IRA) or restructure an earlier phase-out of the production tax credit, deployment could slow significantly.
The US is likely in store for lighter standards on emissions regulations, more protectionist trade policies, and removing the US from the Paris Agreement, all of which would shift US policy away from a net-zero trajectory.
However, bi-partisan support for the Inflation Reduction Act (IRA) in Congress, competitive economics for renewable power and private sector net zero goals will not derail the energy transition.
David Brown, director of the energy transition service at Wood Mackenzie, said: “The IRA has supported over US$220 billion in manufacturing investment and much of this has been concentrated in Republican-led states.
“The likelihood of a full IRA repeal is low. However, there could be some amendments to the legislation.
“Renewables investment could slow, but capacity is set to grow by 243GW from 2024-2030 even in our delayed transition scenario.
“We expect President-elect Trump to support the growth aspirations of Big Tech.
“We have identified over 51 GW of new data center announcements since 2023, which have a better chance of coming to fruition if Republican-supported permitting reform comes to pass.
“With manufacturing investments concentrated in Republican states, we believe advanced manufacturing credits will remain intact and around 7 GW of solar manufacturing will likely proceed.”
Brown noted that with a significant momentum for low-carbon investment, the impact of the election will vary by sector, commodity and technology, with some more at immediate risk than others.
According to Wood Mackenzie, there is no lack of demand for solar energy in the United States.
The pipeline of contracted utility-scale solar projects is nearly 100GW, and customer demand for distributed solar projects continues to grow.
A Trump administration will not change this in the near term, Wood MacKenzie concluded.
Michelle Davis, global head of solar for Wood Mackenzie, said: “We expect flat installation growth in the next few years despite high demand for solar, driven primarily by interconnection and transmission bottlenecks.
“Then, from 2028-2031, annual growth should pick up modestly, averaging 5% annually and reaching about 50 GW.
“However, various IRA incentives such as tax credit bonus adders and transferability of tax credits propel additional growth in our base case forecast.
“This growth is at risk if the IRA undergoes substantial modifications – a strong possibility given Trump’s agenda to maintain tax cuts.”