Sign In or Create an Account.

By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy

Economy

Investors Are Dumping Any Energy Stock That Touches Asia

Companies have been trying for years to domesticate their supply chains. They didn’t move fast enough.

A Chinese flag.
Heatmap Illustration/Getty Images

Over a decade’s worth of economic incentives — tariffs on solar components from China, the Inflation Reduction Act’s subsidies for American clean energy manufacturing, tariffs on Southeast Asian solar for avoiding tariffs on China — have been telling the American renewables industry in every possible way: Bring your supply chains home.

Now any company that hasn’t completely done so is being hunted down by Wall Street. East and Southeast Asia have been the most heavily hit by Donald Trump’s gamut of new tariffs, with China facing cumulative tariffs of over 60% and “reciprocal” tariffs of 46% hitting Vietnam, 49% on Cambodia, and 37% on Thailand.

Fluence, a battery storage systems company, has fallen almost 22% in the past two trading days. The Chinese solar company Jinko is down 15%.

“There no question that there will be impacts on the supply chain for clean energy, solar, wind,” Rob Collier, vice president of marketplaces for LevelTen, a platform for clean energy deals, told me. He’s spent the past few days on calls with developers and trade organizations, he said, and “truly, everyone is trying to get their arms around this and digest, what are the impacts?”

While there’s inherent uncertainty with anything involving America’s dealmaker-in-chief, the market has not held back from making its judgment.

Fluence has been actively trying to bring more of its supply chain to the United States for years, opening a battery module facility in Utah last September. But it “still relies on contract manufacturing in Vietnam to meet demand until U.S. operations scale,” wrote Jefferies analyst Julien Dumoulin-Smith in a note to clients Friday.

“We’ve credited Fluence for its domestic strategy,” the note said, “but the reality is that the company didn’t onshore operations soon enough (and understandably so). There’s no way to time tariffs of this scale.”

Like many companies with supply chains in Asia, Fluence got a slight breath of relief early Friday when President Donald Trump posted on Truth Social that he was in talks with Vietnam’s leader To Lam about potentially lowering the country’s tariff.

But another company that wasn’t so lucky is the inverter and battery company Enphase, whose shares are down 8% since the tariff announcement.

Like many electrical equipment and clean energy companies, Enphase has been telling anyone who will listen that it wants to get out of China. The company’s chief executive, Badri Kothandaraman, told Bloomberg in February, “We need to be making cell packs outside of China, and that’s what we are going to be focusing on the next year.” He added that a third of Enphase’s assembly was in the United States.

But at the same time, it was also telling investors how difficult reshoring will be.

In its annual report, Enphase disclosed that its lithium-iron phosphate battery cells “are supplied solely via our two suppliers in China,” and expressed both hope and doubt of its ability to source them elsewhere. “Although we are in the process of searching for other suppliers outside of China for future supplies, the expertise and industry for the LFP battery cell is primarily in China and we cannot be certain that we will locate additional qualified suppliers with the right expertise to develop our battery cells outside of China, if at all.”

The company said it had “focused efforts and resources on attaining manufacturers outside of China, primarily in Mexico and India,” but had since “moved a significant portion of our manufacturing to the United States.” About 85% of Enphase’s microinverters are made domestically, while the rest are made in China and India, according to Morningstar analyst Brett Castelli.

For the solar industry, China tariffs are nothing new — they’ve been in place to some degree or another since the 2010s. The industry’s response has largely been to move supply chains into Southeast Asia. U.S. solar imports from Southeast Asia hit $12 billion in 2023, according to Reuters, while Chinese imports have been almost eliminated.

“The industry has made significant progress in reshoring manufacturing to the US following the Inflation Reduction Act, but imports of items such as solar panels remain, especially for the upstream portion of the value chain (solar cells),” Castelli wrote in a note Thursday.

“Tariffing Vietnam is tariffing a lot of Chinese companies,” Damien Ma, an adjunct professor at the Kellogg School of Management and founder a China-focused think tank, told me. “If you’re a Chinese solar company right now, it’s not a great time.”

Mizuho Securities analyst Maheep Mandloi wrote to clients Thursday that residential solar battery companies were the most affected of any clean energy stocks, but that the entire sector’s exposure was “limited” due to equipment being a “smaller portion of developer capex and … nearshoring was already underway owing to IRA incentives.”

If anything, Mandloi wrote, the greatest risk to developers was “elevated costs of U.S. components, given cheap substitutes may no longer be available to others, and corresponding demand destruction from higher prices.”

Mandloi also forecast that residential installer Sunrun would suffer from the tariffs due to “limited pass through price power,” i.e. limited ability to make customers cover its increased input costs, which would decrease demand across the solar industry.

He also pointed to Enphase and the solar inverter and equipment company Solaredge, which is trading down 13% since Wednesday. That’s despite Solaredge’s manufacturing footprint having “entirely changed” due to subsidies for advanced manufacturing in the IRA, its head of investor relations, JB Lowe, said at a March conference. “We used to manufacture in multiple locations in Asia, in Mexico, in Europe even, and we have moved for all intents and purposes our manufacturing footprint entirely to the U.S.”

While Donald Trump may not be interested in climate change or green energy, his predecessor’s climate policies have been responsible for pulling substantial production from Asia to the United States, and now the market wants more of it.

“The IRA is more or less an anti-China industrial policy,” Ma told me.

You’re out of free articles.

Subscribe today to experience Heatmap’s expert analysis 
of climate change, clean energy, and sustainability.
To continue reading
Create a free account or sign in to unlock more free articles.
or
Please enter an email address
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
Bruce Westerman, the Capitol, a data center, and power lines.
Heatmap Illustration/Getty Images

After many months of will-they-won’t-they, it seems that the dream (or nightmare, to some) of getting a permitting reform bill through Congress is squarely back on the table.

“Permitting reform” has become a catch-all term for various ways of taking a machete to the thicket of bureaucracy bogging down infrastructure projects. Comprehensive permitting reform has been tried before but never quite succeeded. Now, a bipartisan group of lawmakers in the House are taking another stab at it with the SPEED Act, which passed the House Natural Resources Committee the week before Thanksgiving. The bill attempts to untangle just one portion of the permitting process — the National Environmental Policy Act, or NEPA.

Keep reading...Show less
Blue
Hotspots

GOP Lawmaker Asks FAA to Rescind Wind Farm Approval

And more on the week’s biggest fights around renewable energy.

The United States.
Heatmap Illustration/Getty Images

1. Benton County, Washington – The Horse Heaven wind farm in Washington State could become the next Lava Ridge — if the Federal Aviation Administration wants to take up the cause.

  • On Monday, Dan Newhouse, Republican congressman of Washington, sent a letter to the FAA asking them to review previous approvals for Horse Heaven, claiming that the project’s development would significantly impede upon air traffic into the third largest airport in the state, which he said is located ten miles from the project site. To make this claim Newhouse relied entirely on the height of the turbines. He did not reference any specific study finding issues.
  • There’s a wee bit of irony here: Horse Heaven – a project proposed by Scout Clean Energy – first set up an agreement to avoid air navigation issues under the first Trump administration. Nevertheless, Newhouse asked the agency to revisit the determination. “There remains a great deal of concern about its impact on safe and reliable air operations,” he wrote. “I believe a rigorous re-examination of the prior determination of no hazard is essential to properly and accurately assess this project’s impact on the community.”
  • The “concern” Newhouse is referencing: a letter sent from residents in his district in eastern Washington whose fight against Horse Heaven I previously chronicled a full year ago for The Fight. In a letter to the FAA in September, which Newhouse endorsed, these residents wrote there were flaws under the first agreement for Horse Heaven that failed to take into account the full height of the turbines.
  • I was first to chronicle the risk of the FAA grounding wind project development at the beginning of the Trump administration. If this cause is taken up by the agency I do believe it will send chills down the spines of other project developers because, up until now, the agency has not been weaponized against the wind industry like the Interior Department or other vectors of the Transportation Department (the FAA is under their purview).
  • When asked for comment, FAA spokesman Steven Kulm told me: “We will respond to the Congressman directly.” Kulm did not respond to an additional request for comment on whether the agency agreed with the claims about Horse Heaven impacting air traffic.

2. Dukes County, Massachusetts – The Trump administration signaled this week it will rescind the approvals for the New England 1 offshore wind project.

Keep reading...Show less
Yellow
Q&A

How Rep. Sean Casten Is Thinking of Permitting Reform

A conversation with the co-chair of the House Sustainable Energy and Environment Coalition

Rep. Sean Casten.
Heatmap Illustration

This week’s conversation is with Rep. Sean Casten, co-chair of the House Sustainable Energy and Environment Coalition – a group of climate hawkish Democratic lawmakers in the U.S. House of Representatives. Casten and another lawmaker, Rep. Mike Levin, recently released the coalition’s priority permitting reform package known as the Cheap Energy Act, which stands in stark contrast to many of the permitting ideas gaining Republican support in Congress today. I reached out to talk about the state of play on permitting, where renewables projects fit on Democrats’ priority list in bipartisan talks, and whether lawmakers will ever address the major barrier we talk about every week here in The Fight: local control. Our chat wound up immensely informative and this is maybe my favorite Q&A I’ve had the liberty to write so far in this newsletter’s history.

The following conversation was lightly edited for clarity.

Keep reading...Show less
Yellow