Concerns about the potential impact of a Donald Trump election victory on their industry are causing European renewable energy companies to shelve expansion plans, anticipate weaker sales, or mistrust funding for United States projects.
The Inflation Reduction Act (IRA), which provides tax breaks and subsidies to American and foreign businesses investing in sustainable energy, is one of the many policies that President Joe Biden’s administration introduced recently to transform the “Great American Clean Energy Dream” into a realisation, apart from making the sector a lucrative one, in terms of investment returns. Trump has dismissed these initiatives as a “green new scam.”
The 2022 law has served as a strong motivator for European businesses operating in this field to grow or create a presence in the United States; but, the possibility of a Trump presidency in the future is causing them to pause.
“You have to ask yourself whether it makes sense to make such a gamble with a Donald Trump who A) is extremely opportunistic, B) is also quite controversial, and C) is also fairly unpredictable,” Peter Roessner, CEO of the hydrogen company H2Apex, based in Luxembourg, told Reuters.
The corporation could have constructed a hydrogen tank manufacturing facility in the United States for around one-third of the USD 15 million total costs under the IRA. Even though the business had previously had preliminary discussions with possible clients, Roessner nevertheless chose to abandon the idea in February due to worries that Trump might win reelection.
Speculation in the markets that Trump will retake the White House in November has become more intense following his shooting incident at an election rally and his subsequent acceptance of the Republican Party nominee.
According to recent polls, the distance between Trump and Kamala Harris, the presumed Democratic nominee who shares Biden’s stance on climate change, is closing. Some polls also show that Harris is leading over the Republican nominee. However, Roessner’s remarks highlight the concern that Europe’s cleantech companies have about the potential consequences of a Trump presidency and how they are attempting to brace for it.
The energy data and analytics company Wood Mackenzie estimates that by 2050, it would jeopardise investments worth an estimated USD 1 trillion in low-carbon energy.
Advisory Services even though a complete repeal of the IRA was unlikely, according to Roland Berger, a Trump government might still endanger subsidies for solar energy, electric vehicle charging, electric automobiles, and energy efficiency.
In July 2024, German solar company SMA Solar released a profit warning, listing potential political changes in the United States, the second-biggest solar market in the world after China, as one of the risk factors.
The biggest manufacturer of solar inverters in the world had originally expected to select a US site by the end of June, but it hasn’t been able to do so and says it’s still looking at several states.
Headaches In Boardrooms
SMA told Reuters on July 4 that it “is noting that the undetermined conclusion of the presidential elections in the USA is currently leading to certain hesitancy to invest in renewable energies locally,” even if the business is not giving up on its expansion goals just yet.
The reluctance is seen in the performance of clean tech stocks; since the murder attempt, the RENIXX index, which measures the 30 largest renewable companies globally, has underperformed global stocks.
Orsted, the biggest offshore wind farm developer globally, has suffered, especially since Trump declared in May 2024 that if reelected, he would attack the industry on his first day in office. Orsted chose not to respond.
There are renewable energy corporations that don’t seem to care about the uncertainties. For instance, German wind turbine manufacturer Nordex announced in July 2024 that it would restart operations at an idle plant in Iowa, claiming that the United States would continue to be a significant and sizable market “independent of political changes.”
Still others, however, cite delays as potential co-funding partners back out of their agreements to work on the projects. The hydrogen company ThyssenKrupp Nucera has stated that it is taking longer to make final investment choices for projects in the United States. This has resulted in an earlier reduction in the unit’s outlook for alkaline water electrolysis.
The corporation stated that although it remained focused on the United States, it was critical to consider the IRA programme’s post-election structure. According to the report, opportunistic investors are less inclined than strategic investors with a long-term focus on the cleantech sector to resume projects earlier in the face of ongoing uncertainties.
Competitor Nel of Norway stated that it had not yet decided whether to proceed with plans to build a production plant in Michigan, saying that the decision was dependent on the level of demand for its goods in the United States market.
Industries outside of clean tech are beginning to feel the effects of the uncertainty surrounding the outcome and implications of the United States election. For instance, German machinery manufacturer Trumpf blamed “geopolitical uncertainty” for its 2023–2024 fiscal year’s 12% decline in the United States sales, which made industrial clients wary.
According to Roland Berger’s global managing director, Marcus Berret, “analysis paralysis” can result from the increasing complexity that businesses must manage on a global scale while making investment decisions.
“As a result, boardroom headaches have significantly grown,” the official commented.