Policy uncertainty could trigger ‘recession’ for renewables, analyst says

Emma Penrod | Source: Utility DIVE | Posted 05/01/2025

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A lack of clarity surrounding the future of tariffs and tax credits has triggered steep declines in funding and investment for renewable energy in Q1 2025, according to Mercom Capital Group.

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Global solar companies experienced a significant decline in corporate funding, dropping 41% year-over-year in the first quarter of 2025, while energy storage funding plummeted by 81%. This downturn is attributed to uncertainty surrounding the Inflation Reduction Act (IRA) and renewable energy tax credits, as well as concerns over tariffs and supply chains. Raj Prabhu, CEO of Mercom Capital Group, warns that without a clear consensus from Congress on the IRA, the renewable energy sector may face a recession-like stall in activity due to this uncertainty.

Despite strong real-world demand for renewable energy, financing deals are stalling as investors lack the necessary information to proceed. While larger operational projects still attract interest from private equity and infrastructure investors, the appetite for smaller or developmental projects is diminishing. If clarity on U.S. energy policy is not achieved soon, the implications for renewable energy markets and the broader energy transition could be severe, according to industry experts.

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Policy uncertainty could trigger ‘recession’ for renewables, analyst says

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