1. Arguably the most pressing issue in the energy storage market is the imposition of tariffs by US President Donald Trump, which will double the price of batteries and battery energy storage systems (BESS) imported from China to the US.
2. Industry-wide movement of BESS manufacturers to countries with lower or no tariffs has been observed prior to the announcement, but the announcement itself has seen a significant escalation of tariffs, with a 46% tariff on Vietnam, 36% on Thailand, 32% on Taiwan, 49% on Cambodia, 24% on Malaysia and 32% on Indonesia.

In light of the recently announced tariffs, developers are facing significant uncertainty and additional costs. The imposition of these tariffs will undoubtedly have far-reaching implications for the energy storage market, and it is essential for developers to take proactive measures to mitigate these risks.

“Domestic sourcing remains the lowest-risk option at this time. With BESS manufacturing still heavily reliant on Chinese materials, finding non-Chinese materials will be critical to avoid the high reciprocal tariff in addition to the Section 301 tariffs already in effect and set to increase,”

says Ravi Manghani, an industry expert. “For 2026+ deliveries, several suppliers will have Southeast Asian manufacturing capabilities, which while facing reciprocal tariffs ranging from 24% to 46%, may still be a better option than China-based suppliers.”
In terms of strategy, developers must now be more vigilant than ever, keeping a close eye on how pricing is trending and maintaining visibility into the entire supply chain. This includes understanding product manufacturing location, timelines, terms available from a supplier, and how pricing stacks up against the rest of the market.

1. Knowing product manufacturing location and timelines can help developers make informed decisions about project timelines and procurement strategies.
2. Understanding the terms available from a supplier, including pricing, payment terms, and delivery schedules, is essential for managing project risks.
3. Comparing prices across different suppliers and manufacturers can help developers identify the best deals and mitigate potential risks.

The uncertainty around the Inflation Reduction Act’s (IRA) Investment Tax Credits (ITCs) is also a pressing concern for developers. The Trump administration’s “Unleashing American Energy” executive order, which targeted Biden-era clean energy policies, has resulted in a continuous assessment of government agencies and funds that support US cell procurement and manufacturing.

“The full implications of this order are still unknown, and there remains a real potential for ITCs to be phased out,”

says Ravi Manghani. “There is a lot of uncertainty and additional costs for developers to consider in the face of rising energy demands.”
In addition to these policy uncertainties, the rise of domestic storage manufacturing is expected to have a significant impact on the market. As battery manufacturers diversify their customer base, there is a growing demand for energy storage systems.

1. The growth of domestic manufacturing is driven by the increasing demand for energy storage and favourable market conditions.
2. Some manufacturers have traditionally focused on the EV sector, while others have pivoted toward storage due to the slower-than-expected growth of the EV market.
3. The expansion of domestic manufacturing is expected to lead to more announcements of new facilities and increased investment in the energy storage supply chain.

However, concerns remain around the impact of policies like the 45X credits, which incentivize domestic manufacturing. Limiting access to these credits for Chinese-owned companies could further exacerbate the challenges faced by the energy storage industry. Key Takeaways:
* The imposition of tariffs by the US government will significantly impact the energy storage market, particularly for developers. * Domestic sourcing remains the lowest-risk option, with several suppliers having Southeast Asian manufacturing capabilities. * Developers must maintain visibility into the entire supply chain and keep a close eye on pricing trends. * The uncertainty around the Inflation Reduction Act’s Investment Tax Credits (ITCs) is a pressing concern for developers. * The rise of domestic storage manufacturing is expected to have a significant impact on the market, driven by increasing demand and favourable market conditions.