Why Trump's war on wind could unwittingly create a stronger US onshore sector

A hostile Donald Trump may inadvertently be making US onshore wind stronger by imposing policies that accelerate overdue consolidation and rinse less sophisticated and speculative capital from the sector.

“To be provocative, I think we have had and still have too much capital in this business. It drives down returns,” Blake Nixon, CEO of Geronimo Power, told a conference in June, referring to renewable energy.

The real issue, he said, is “there are way too many developers, way too many people in the interconnection queues, and way too many people talking to landowners that don’t know what they are doing.”

Nixon added: “It really mucks up the machinery for people trying to do real business. Full stop.”

Geronimo, like many larger independent wind power producers (IPPs) in the US is foreign owned, in this case, by Canada’s Brookfield Asset Management.

Since Trump took office 20 January, he has sought to undermine onshore wind development, directly or indirectly.

Trump's war on wind

Measures include ending activity on US public lands and imposing onerous tariffs on certain wind components, and raw materials such as aluminum and steel used by turbine OEMs. Import taxes on electrical equipment used by projects have also raised costs.

The administration has additionally launched a "national security" probe of wind imports. It vowed a more restrictive approach when weighing federal permits that projects on private property may require for environmental reasons or power line access on federal lands.

In July, the administration rescinded a $4.9bn conditional federal loan guarantee for Invenergy’s high-profile merchant Grain Belt Express transmission line project that would carry 2.25GW of wind energy.

With help of a Republican majority in Congress, he signed a bill into law on 4 July that sunsets tax credits at least five years ahead of schedule for wind component manufacturing, new generation, and turbine repowering.

The law also created complex Foreign Entity of Concern (FEOC) rules that apply next year. These will deny tax credits – excluded are projects under construction by end of 2024 – on new wind (solar and battery storage) plants that use too much Chinese equipment or US products with excessive Chinese inputs.

The same would occur to firms that rely on Chinese investment or where “effective control” is conferred to certain entities such as Chinese-related counterparties under contracts and technology licenses.

The pancaking of growing contracting, execution, political, regulatory and tariff risks, combined with compressed tax credit eligibility timelines and FEOC rule compliance, makes it more difficult for smaller and some medium-scale project developers with fewer resources to navigate these complexities and profitably compete.

Size matters

The winners are the biggest IPPs led by NextEra Energy followed by European heavyweights such as Iberdrola, Enel, EDP, RWE, and ENGIE. Brookfield and Clearway Energy in the US are also large onshore players.

John Ketchum, CEO of onshore wind pacesetter NextEra Energy, in late July ticked off competitive advantages that he believes will enable his company to “do really well in a pull-forward market,” referring to new tax credit deadlines.

“We have the balance sheet, scale, experience, and technology,” he told analysts, and supply chain capability “that I believe is the best in the sector.”

Morgan Stanley notes that NextEra also leverages an immense dataset, technology research and development in origination, design, land optimisation, and operations, and integration of artificial intelligence across its clean energy businesses.

Other large IPPs are also taking advantage of some of these same capabilities, although their investment plans remain fluid.

“Size matters, right? People want to work with the big players,” Enbridge CEO Gregory Ebel told analysts in July. “Meta doesn’t want to work with a small-cap energy provider.”

Enbridge, which supplies wind, solar, and gas-fired power in the US, argued major off-takers want to know how ultimately their infrastructure will be supplied and that “they can rely on the energy. That’s what we provide,” said Ebel.

While the US in January had 154GW of turbines spinning onshore, second only to China, wind has been a business in decline. The 3.9GW added in 2024 was the lowest since 2013 and installations have dropped every year this decade.

At least several dozen IPPs had project pipelines, along with electric utility holding companies such as Berkshire Hathaway Energy and Xcel Energy – all chasing a piece of a shrinking pie.

Some are relatively new to the sector, drawn in by former President Joe Biden’s climate-driven clean energy ambitions. Historically low interest rates in 2020 through first quarter 2022 made it cheap to borrow and build.

Yet, the private capital influx didn’t translate to much more generating capacity even with Democrats’ Inflation Reduction Act (IRA) providing unprecedented lucrative federal tax credits after August 2022.

Biden’s partisan top-down climate agenda began to unravel from growing public opposition and macroeconomic factors such as a difficult national Covid-19 recovery, 40-year high inflation, an interest rate surge after April 2022, and trade tensions with China.

Other impediments are permitting delays and interconnection, which has morphed at times into a crap shoot in regional grids.

Clean energy developers flooded queues with projects of varying quality in the hope several could navigate through lengthy security screening studies and other regulatory hurdles. Most wait three to five years with no certainty of approval.

'Headed for a shakeout'

In a move to weed out speculative projects, some grid operators are requiring large deposits for interconnection that are weighing on capital-constrained mid-sized and smaller developers.

“How the level of interest in the mid-term pipeline changes over the next couple of years will be really interesting,” Britta von Oesen, partner at CRC-IB investment bank, told the conference. “That market is headed for a shakeout over the next three years, 2025 through 2027.”

“You add on top of that the tariff and tax risk, and you are going to see a significant number of projects fall out of the interconnection queues,” she continued. “I expect to see a significant amount of consolidation among smaller developers that are not well capitalised.”

With a leaner and stronger stable of onshore wind developers, the sector should be better placed to develop what it can under Trump and compete without subsidies when he leaves office in early 2029.