Consultancy firm McKinsey has said that high tariffs could stall the momentum of clean energy in the US and Europe in its scenario-based analysis through to 2035.
It focuses on solar, wind, battery energy storage systems (BESS), transformers and the electric vehicle (EV) markets.
In its study, three scenarios range from a continuation of current trade policies to the highest-tariff scenario where tariffs on clean energy technologies are substantially raised.
In the highest tariff scenario, installed solar capacity could be 9% lower in the US and 7% lower in the EU compared to how things were in 2024.
McKinsey said that battery storage deployment could slow down by 4% in the US and 10% in the EU.
For EVs, the company said projected EU market penetration decreases to 41% under the highest tariff scenario, where in the baseline it is 50%.
There could be additional considerations for the EU’s planned 2035 ban on internal combustion engine vehicles.
Overall energy costs could be increased for BESS, as the firm suggests by 2050 the cost of energy systems could be 2% higher in the US and 3% higher in Europe. This is compared to lower tariffs or the status quo.
Gas is projected to have a slightly higher share in the energy mix in the US by 2035, regardless of tariffs.
“Tariffs introduce new layers of cost and complexity to an already precarious clean energy landscape,” said Humayun Tai, senior partner at McKinsey. “Our scenario analysis indicates that, depending on their duration and scale, tariffs could raise system costs by up to 3% and delay deployment timelines by as much as two years. These shifts carry real implications for how companies plan and invest.”
Image: A graph showing the decrease in solar capacity if high-tariffs are put in place. Credit: McKinsey.
