Policy uncertainty could trigger ‘recession' for renewables, analyst says
Global solar companies' total corporate funding, including venture capital, public market and debt financing, declined 41% year over year during the first quarter of 2025, while energy storage companies' funding fell 81%, according to Mercom Capital Group, a consulting firm.
Uncertainty — primarily around the fate of the Inflation Reduction Act and renewable energy tax credits, but also around tariffs and supply chain concerns — has prevented many financing deals from moving forward because the negotiating parties can't reliably calculate potential returns, said Raj Prabhu, CEO and co-founder of Mercom Capital Group.
If Congress does not soon signal a consensus on the IRA's fate, the renewable energy industry could end up snared in something like a sector-specific recession 'in the sense that activity is going to stall because of the uncertainty,' Prabhu said.
Funding for solar, energy storage and smart grid companies plummeted essentially across the board during the first quarter of 2025 — an outcome Prabhu described as expected following the election of President Donald Trump, but one that could be concerning should the trend continue long term.
Prabhu said investor interest in renewable energy had begun to cool even before the election in November in conjunction with Trump's then-growing popularity. But the slump isn't related as much to Trump's specific positions, Prabhu said, as it is to the overall lack of certainty about how key elements of U.S. energy policy will ultimately fare.
'Mergers and acquisitions can still happen, but financing is a whole other deal right now,' given that investors and developers don't know what it will cost to import their equipment and how much they can expect to receive in tax credits, Prabhu said. 'Yes, some venture capital deals can happen if you have a company with something really innovative. But beside the sure-fire deals ... the rest are wait and see.'
Global solar companies — except companies based in China — raised $4.8 billion during the first quarter, down from $8.2 billion in the first quarter of 2024, but up from the $4 billion raised in the final quarter of 2024, according to data Mercom compiled. A single $1 billion venture capital deal caused the quarterly results, particularly for venture investment, to skew higher than they would otherwise appear, it noted. Public market funding totaled just $20 million, a 99% decline compared with the first months 2024, the firm said.
The results for energy storage companies were similarly skewed by a single large deal, though in the opposite direction. Northvolt's $5 billion funding raise in Q1 2024 helped bring last year's total to $11.7 billion, compared with $2.2 billion raised by energy storage companies this year. Smart grid companies saw Q1 funding drop 23%, from $686 million last year to $530 million this year.
These figures do not include the impact of the last several rounds of tariffs announced, paused and announced again in April, Prabhu said, so he expects investor interest in renewable energy to decline even further in the second quarter.
Real-world demand for renewable energy remains strong, but financiers can't get the information they need to move ahead with new deals, Prabhu said. Tom Harper, the head of global consulting firm Baringa's North American energy advisory team, noted that many private equity and infrastructure investors remain quite interested in operational renewable energy and battery storage assets. The appetite for smaller projects and projects that that remain in developmental stages is waning, however, Harper said.
Harper said he has spoken to companies that planned to sell portfolios of early- to mid-stage projects that have been unable to do so, prompting them to reconsider how much they themselves are willing to continue to spend on these projects.
If the market does not receive greater clarity on the direction of U.S. policy within the next few months, the impact to renewable energy markets and to the energy transition could be significant, Prabhu said.
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Chip linchpin ASML warns on 2026 growth amid tariff headwinds ASML (ASML, shares slumped almost 8% in premarket trading after the chip industry linchpin said it may not achieve growth in 2026. The warning came even as the world's biggest supplier of chipmaking gear's second quarter bookings topped Wall Street estimates on Wednesday. Reuters reported: Read more here. ASML (ASML, shares slumped almost 8% in premarket trading after the chip industry linchpin said it may not achieve growth in 2026. The warning came even as the world's biggest supplier of chipmaking gear's second quarter bookings topped Wall Street estimates on Wednesday. Reuters reported: Read more here. Gold rises as trade war fears bolster haven asset Gold (GC=F) rose overnight Tuesday as a wave of tariff updates did little to appease flighty investors looking for safe investments. With multiple rocky trade deals on the table, markets have pushed back into the valuable metal which has risen by over 25% this year so far. Bloomberg reports: Read more here. Gold (GC=F) rose overnight Tuesday as a wave of tariff updates did little to appease flighty investors looking for safe investments. With multiple rocky trade deals on the table, markets have pushed back into the valuable metal which has risen by over 25% this year so far. Bloomberg reports: Read more here. Trump order to open up private investment to retirement plans. President Trump is in the process of signing an executive order that will allow retirement plan providers to invest more heavily in private assets, according to those familiar with the matter. The order should take place within the next few days and will open up retirement plans to riskier investments. Reuters reports: Read more here. President Trump is in the process of signing an executive order that will allow retirement plan providers to invest more heavily in private assets, according to those familiar with the matter. The order should take place within the next few days and will open up retirement plans to riskier investments. Reuters reports: Read more here. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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US trade chief Greer says wants US trade deficit on downward path
By David Lawder and Andrea Shalal (Reuters) -U.S. Trade Representative Jamieson Greer said on Wednesday that his trade policy goal was to put the $1.2 trillion U.S. trade deficit on a downward path and to stem the loss of U.S. advanced manufacturing capacity. Greer, in remarks to a reindustrialization summit in Detroit, said that President Donald Trump's expanded tariff program was already bearing fruit in terms of spurring new industrial investments in the U.S. This includes $4 billion from General Motors to move some production to the U.S. from Mexico, new steel and pharmaceutical plants, Greer said, adding that Trump was encouraging countries to move production to the U.S. to avoid his tariffs. Greer said in most substantial policy address since taking office in late February, that the U.S. industrial decline was due to long-running trade liberalization efforts by both Democratic and Republican administrations, including allowing China to join the World Trade Organization. The 2024 U.S. trade deficit of $1.2 trillion was "a state of affairs that is as unsustainable as it is unacceptable," Greer said. "It almost sounds like Monopoly money." To help remedy this, he said Trump's tariff policies called for a universal tariff rate of 10% on all countries, with higher rates for the most "problematic" ones, including China, which has the highest tariff rate of 55%. "Of course, the president signaled a willingness to negotiate with countries if they want to have an alternative relation with us and really join us in re industrializing. And countries have been responsive," Greer said. Trump himself drafted the recent letters that he has set to a number of countries informing them of tariff rates for their imports absent trade deals, Greer said. "He had a line in there that says there will be no tariff if you decide to build or manufacture product within the United States," Greer said. Greer also said that he also wanted to increase the manufacturing share of U.S. GDP and increase the median household income in the U.S. While tariffs were an important tool in this, there are others, including the recent enactment of a massive tax cut and spending bill that includes investments in energy, tax breaks for research and development and immediate expensing of capital investments against tax liabilities. As the top U.S. trade lawyer, Greer said, "my job is to clear the playing field of all the pitfalls, the obstacles, all the unfairness that has hindered U.S. re-industrialization." Sign in to access your portfolio
