The Impact of Trump Policies on U.S. Solar Investment and Grid Reliability

The Trump administration’s energy policies from 2017 to 2021 left a lasting imprint on the U.S. solar industry and grid infrastructure, creating a complex landscape of financial and strategic risks for clean energy investors. By prioritizing fossil fuels, imposing tariffs on solar imports, and rolling back environmental regulations, the administration introduced policy uncertainty that reshaped market dynamics and investor behavior. As the U.S. energy sector transitions toward decarbonization, understanding these long-term risks is critical for stakeholders navigating an evolving regulatory and economic environment.

Policy Uncertainty and Solar Investment

The Trump administration’s 2018 imposition of a 30% tariff on imported solar panels—gradually decreasing to 18% by 2022—significantly raised project costs, leading to the cancellation or delay of over $20 billion in solar investments and the loss of more than 62,000 jobs [3]. While the federal Investment Tax Credit (ITC) remained in place, its phased reduction from 30% to 26% by 2020 under Trump’s tenure created a vacuum in federal support for clean energy [1]. This contrasted sharply with the Biden administration’s 2022 Inflation Reduction Act, which expanded the ITC and provided a clearer policy framework for investors [1].

The administration’s broader protectionist trade policies, including tariffs on steel and aluminum, further compounded costs for solar infrastructure [4]. These measures, justified as efforts to protect domestic manufacturing, instead stifled the solar industry’s growth during a period of declining global technology costs. According to a report by BloombergNEF, U.S. renewable energy investment fell by $20.5 billion in the second half of 2024, reflecting investor recalibration amid Trump-era policy headwinds [1].

Grid Reliability and Regulatory Fragmentation

While the Trump administration rolled back over 100 environmental regulations—including the Clean Power Plan—it also introduced pro-renewable FERC orders, such as Order 841 (2018) and Order 2222 (2020), which aimed to integrate distributed energy resources into wholesale markets [4]. However, the administration’s simultaneous deregulation of fossil fuels and withdrawal from the Paris Agreement in 2020 created conflicting signals for grid planning [6].

Grid reliability now faces dual challenges: aging infrastructure and insufficient investment in transmission expansion. The U.S. grid, with over 600,000 miles of aging transmission lines, requires a two- to fivefold expansion to accommodate renewable energy from remote locations [3]. Trump’s “beneficiary pays” cost recovery model and slow permitting processes for transmission projects have exacerbated these challenges, creating regulatory fragmentation that hinders progress [3]. For instance, the cancellation of the Revolution Wind project under Trump’s 2025 executive orders has raised concerns about increased blackout risks and delayed decarbonization goals [1].

Investor Confidence and Capital Flow Trends

Clean energy investors have experienced heightened volatility since 2020, with climate-themed equities showing mixed performance. From 2020 to 2023, clean energy stocks averaged declines of –11% and –10.5%, driven by rising interest rates, supply chain disruptions, and policy uncertainty [1]. While diversified climate transition funds outperformed pure-play renewables, the sector’s sensitivity to macroeconomic factors remains pronounced [1].

Academic research highlights a “greenium” effect, where investors accept lower returns for green stocks due to hedging benefits against climate transition risks [1]. However, Trump’s rhetoric—criticizing renewables as inflationary and blocking state-level EV mandates—has further muddied the waters [2]. Legal and regulatory risks, including investor-state disputes over revoked projects, add another layer of complexity [4].

Strategic Risks for Investors

The long-term risks for clean energy investors include:
1. Regulatory Whiplash: Frequent policy reversals between administrations create uncertainty, deterring long-term capital commitments.
2. Grid Modernization Delays: Without robust transmission infrastructure, renewable projects face interconnection bottlenecks, reducing their economic viability.
3. Global Competitiveness: Trump’s cuts to R&D funding for solar and wind technologies weakened the U.S. position in the global clean energy race [5].

The Biden administration’s Inflation Reduction Act has injected $369 billion into clean energy, but overcoming Trump’s legacy of deregulation and fragmented permitting will require sustained political will [4]. For investors, sectoral diversification, geographic focus, and active stock selection remain key strategies to mitigate these risks [1].

Conclusion

Trump’s energy policies have left a legacy of market disruption and regulatory ambiguity, complicating the path to a reliable, low-carbon grid. While state-level initiatives and global momentum for renewables offer some resilience, federal policy inconsistency remains a critical barrier. Investors must weigh these strategic risks against the growing demand for clean energy, recognizing that grid modernization and policy stability will be pivotal in determining long-term returns.

Source:
[1] Will Trump Reduce or Eliminate Solar Tax Incentives? [https://greenridgesolar.com/donald-trump-solar-tax-credit-incentives/]
[2] Trump revives attacks on renewable energy as solar surges [https://subscriber.politicopro.com/article/eenews/2025/08/21/trump-revives-attacks-on-renewable-energy-as-solar-surges-00517166]
[3] Tariffs in the first Trump administration [https://en.wikipedia.org/wiki/Tariffs_in_the_first_Trump_administration]
[4] Federal Energy Regulatory Commission [https://climate.law.columbia.edu/content/regulation-database-federal-energy-regulatory-commission]
[5] 7+ Trump's Energy Dept: Policy & Impact - whiteweb.ua | [https://dev.whiteweb.ua/trump-department-of-energy/]
[6] United States and the Paris Agreement [https://en.wikipedia.org/wiki/United_States_and_the_Paris_Agreement]