Navigating the Solar and Storage Sector's Bifurcation: Opportunities Amid Policy and Market Shifts

The solar and storage sector in 2025 is undergoing a profound bifurcation, driven by divergent regional policies, supply chain disruptions, and evolving developer strategies. While the U.S. market grapples with trade restrictions and policy uncertainty, emerging economies and select U.S. states are carving out robust growth trajectories. For investors, the challenge lies in identifying regional developers who are not merely surviving these shifts but strategically repositioning to capitalize on them.

Policy and Tariff-Driven Bifurcation

The U.S. solar market is increasingly fragmented due to the interplay of anti-dumping duties (AD/CVD) and the Inflation Reduction Act (IRA). Tariffs on solar modules from Southeast Asia have surged—Jinko’s duties in Vietnam rose to 71.74%, while Malaysia’s dropped to 6.43%—creating a patchwork of costs and supply risks [1]. These tariffs, combined with the "Foreign Entity of Concern" (FEOC) restrictions under the One Big Beautiful Bill (OBBBA), have forced developers to prioritize domestic content, even at the expense of efficiency and cost [3]. For instance, U.S.-based manufacturers like Hanwha Qcells and First Solar now hold a competitive edge, as their products avoid import tariffs, while imported panels face price hikes of 30–40% [6].

The IRA’s tax credits, particularly the 30% Investment Tax Credit (ITC) for solar-plus-storage projects, remain a lifeline. However, proposed rollbacks—such as reducing the ITC to 10% without adders—could increase the levelized cost of energy (LCOE) for solar projects by over 145% by 2028 [1]. This uncertainty has led to a 7% decline in U.S. solar installations year-over-year in Q1 2025, with commercial and industrial (C&I) solar being the hardest hit [2].

Strategic Adaptation: Regional Developers in the Crosshairs

Amid these headwinds, regional developers are adopting differentiated strategies to mitigate risks and unlock value. For example, Cypress Creek Renewables has pivoted to behind-the-meter (BTM) projects, leveraging rising grid charges and retail electricity rates to enhance profitability [1]. Similarly, ES Foundry is scaling domestic cell manufacturing in South Carolina, aligning with IRA incentives while reducing exposure to volatile import markets [1].

In the storage segment, Gemini Solar and Storage Project in Nevada exemplifies the integration of solar with 380 MW battery storage, providing grid stability and displacing 1.5 million metric tons of CO₂ annually [6]. Such projects are increasingly viewed as essential for managing solar intermittency, with front-of-the-meter (FTM) storage dominating in California and Texas [2].

Emerging markets are also reshaping the landscape. In China, China Huaneng Group has deployed the world’s largest vanadium flow battery (200 MW/1 GWh) paired with a 1 GW solar farm, addressing intermittency while reducing CO₂ emissions by 1.6 million tonnes annually [5]. These innovations highlight the importance of technology diversification and localized solutions.

Investment Opportunities: Where to Position

1. Domestic Supply Chain Resilience: Developers investing in upstream manufacturing, such as polysilicon and wafer production, are well-positioned to benefit from IRA-driven demand. For example, Mission Solar Energy is expanding its U.S. manufacturing footprint, avoiding import tariffs while securing long-term contracts [6].
2. Nearshoring and Non-FEOC Partnerships: Companies forming joint ventures in non-FEOC regions—such as Sumitomo Electric Industries in Japan—are securing stable component supplies while complying with U.S. regulations [4].
3. Storage-Integrated Projects: Solar-plus-storage developers, like Trina Solar in Yancheng, are leveraging ITC eligibility to enhance project economics. With FTM storage capacity in the U.S. expected to grow by 57% in Q1 2025 [2], these projects offer both regulatory compliance and financial resilience.
4. Emerging Markets with Policy Clarity: India, the Middle East, and Southeast Asia are seeing rapid solar and storage growth due to supportive policies. For instance, HBIS Group in China is deploying vanadium batteries to support green steel initiatives, demonstrating the scalability of region-specific solutions [5].

Conclusion

The solar and storage sector’s bifurcation presents both risks and opportunities. While U.S. developers face policy and tariff headwinds, those with agile strategies—such as nearshoring, technology diversification, and storage integration—are poised to thrive. Investors should prioritize regional players that align with regulatory trends, leverage IRA incentives, and address local market needs. As the global energy transition accelerates, the ability to navigate this fragmented landscape will define the next era of clean energy investment.

Source:
[1] Implications of Federal Policy Changes on the U.S. Distributed Solar and Storage Markets [https://www.teneo.com/insights/articles/implications-of-federal-policy-changes-on-the-u-s-distributed-solar-and-storage-markets/]
[2] Solar Market Insight Report Q2 2025 – SEIA [https://seia.org/research-resources/solar-market-insight-report-q2-2025/]
[3] Navigating One Big Beautiful Bill and tariffs in U.S. solar PV and storage [https://www.pv-magazine.com/2025/09/03/navigating-one-big-beautiful-bill-and-tariffs-in-u-s-solar-pv-and-storage/]
[4] Sumitomo Electric Successfully Completes its First Vanadium Redox Flow Battery at a Community Microgrid in Kyushu, Japan [https://sumitomoelectric.com/press/2025/05/prs037]
[5] Next step in China's energy transition: energy storage [https://www.weforum.org/stories/2024/06/next-step-for-china-s-clean-energy-transition-is-storage-deployment-in-its-world-class-industries/]
[6] April 2025 Tariffs | Solar Equipment | Industry Impact - Sunhub [https://www.sunhub.com/blog/april-2025-reciprocal-tariffs-solar-equipment/?srsltid=AfmBOoqdEI2YneAuvCUtfOzrJIBV5PY2r-cnCxTXP3PSbM11WD0amCTA]