U.S. solar and storage face cost headwinds under fragmented trade, McKinsey report finds

A new industry report looks at what trade tensions could mean for the cost of solar panels and battery storage in the U.S. The short version: battery systems could see the biggest price increases, with costs rising 40% to 50% if global trade keeps fracturing, mostly due to tariffs on battery materials and bottlenecks in critical minerals. Solar panels have gotten much cheaper over the years, dropping about 70% in price, but that trend may not continue automatically. Tariffs on steel and aluminum, used in panel frames and mounting equipment, could also push up the cost of solar installations more broadly.

None of this changes anything for homeowners immediately. These cost pressures mainly affect large-scale solar and battery projects built by utilities and developers, not the rooftop panels or home battery systems homeowners might install. But because big installers and utilities buy the same globally-traded equipment and materials, rising costs at that scale can eventually show up in pricing for residential systems too, if tariffs or supply chain problems persist.

The report also points to a separate trend worth knowing about: electricity demand in the U.S. is climbing fast, largely because of data centers and artificial intelligence. That is pushing utilities to rely more on pairing renewable energy with battery storage to keep power reliable, while natural gas continues to fill gaps in the meantime. For a homeowner, the main takeaway is that the cost and pace of the broader shift to clean energy depends heavily on trade policy and materials costs, not just on how cheap the technology itself becomes.