Trump tariffs could increase US wind power costs by up to 7%, says Wood Mackenzie

Proposed trade tariffs and measures could significantly slow the development of offshore wind farms in the US. According to analysts at Wood Mackenzie, higher import duties could increase wind power costs by several percentage points. The tariffs are another Trump move injecting uncertainty into the already precarious future of wind farms in the US. 

According to analytics firm Wood Mackenzie, new trade tariffs and higher import duties could threaten the viability of offshore wind projects in the US, significantly slowing the sector's growth.

The US wind industry is heavily reliant on imports, particularly for components such as blades, drivetrains and electrical systems. In 2023, imports of wind energy equipment to the US were valued at USD 1.7 billion. A total of 41% came from Mexico, Canada and China.

According to the report, the proposed tariffs will increase the levelised cost of energy (LCOE) for wind power in the US by 4% in the near term. If 25% tariffs are imposed on all products, the LCOE could rise by 7%.

"Protectionist policies will increase capital expenditure on wind projects," said Endri Lico, a principal analyst at Wood Mackenzie.

"In a scenario with a universal 25% tariff on all imported products, the impact would be even greater, with turbine costs potentially rising by 10% and total project costs increasing by 7%. This would have a material impact on the industry and could put some projects at risk for economic reasons," Lico added.

Trump has created uncertainty and everyone is waiting

This is another move by Trump that has cast uncertainty over the future of wind projects in the US for years to come. An order he issued on his first day in office indefinitely paused new offshore wind leases in US coastal waters and halted the issuance of new permits pending a review. This put many projects already in development at risk.

"Supply chain players are waiting for the dust to settle and assessing their options," Lico said.

"We expect wind energy manufacturers to adopt a combination of measures to mitigate the impact of tariffs, including rerouting and restructuring their supply chains and assembly lines, increasing localisation in the US and raising their prices," Lico added.

The wind industry lobbying group American Clean Power called Trump's move a measure that would threaten domestic energy development and harm US businesses and workers in a statement on January 20. The introduction of import tariffs is at odds with the administration's goal of reducing bureaucracy and unleashing energy production, American Clean Power CEO Jason Grumet said in the statement.