Editor’s Note: At the time this was written, the new tariff had not been increased, the reference of 34% duty and total tariff of 64.9% is now above 100%, albeit it is a moving target.

Anyone who claims to know the implications of the tariff wars, beyond the current market chaos, would merely be guessing. No one knows how the impacts will all shake out, given the magnitude of the uncertainties. It feels as though change is looming. This is particularly true when assessing the overall impact on energy, given the confluence of power demand growth forecasts, renewable energy sources, and tariffs.

The energy sector experienced the most severe downside after tariffs were announced, primarily due to the sell-off in oil, but the renewable sector is also being subjected to pressures from the institution of tariffs. China is the single most important exporter of battery cells to the US and was already subjected to significant tariffs from previous administrations. The “new” Trump tariff will add a 34% duty, bringing the total up to 64.9%, which will dramatically increase the price of batteries for electric vehicles. Imports from both South Korea and Japan will also be subject to new tariffs, although at slightly lower percentages. Of course, it is not only electric vehicle batteries that are being impacted, as the entire value chain of energy products and sources is feeling the whirlwind of tariffs and is likely to have broad implications for spot and future prices.

Solar PPA prices are likely to require some renegotiations, as the additional tariffs could add $1/MWH to costs that will need to filter through to buyers. The extensive backlog of thermal generation and related equipment may require significant additional contingency pricing to address the associated uncertainty. With the current demand for data centers and the need for expediency of new resources to address upcoming needs, navigating these disruptions complicates investment decisions.

It is worth noting that opportunities do percolate through the volatility in the commodity markets. The large correction seen in both oil and natural gas presents such options for strategic buyers, as the world still needs energy in all of its forms. The power market demand is still experiencing significant growth, and if renewable penetration begins to slow, then pricing could become attractive, given delays in sources. Scaling into purchases at prices two months ago that would have been extremely attractive has become feasible due to the recent sell-off. Now is the time to think strategically and even in a contrarian fashion, given what the market is now offering.

CPV Retail can help strategize through the turmoil and facilitate a plan of action during this unique period. With a knowledgeable desk, we know the market is ever-changing, and we are flexible with that change. As the saying goes, and this is paraphrasing, “Be a buyer when there is panic in the streets!”