Renewable energy and battery storage companies are cancelling their Texas projects at rates not seen since the height of the COVID-19 lockdowns. In the last two months, four GW of battery storage systems, 3.5 GW of solar farms, and nearly two GW of natural gas power plants have been cancelled, according to a recent analysis by ERCOT, the Electric Reliability Council of Texas. Battery storage projects are especially vulnerable to cancellation because nearly all battery cells used in those systems come from China, which is being heavily tariffed. The cancellations are occurring despite Texas expecting to see an unprecedented increase in electricity demand as data centres and other large electricity users move into the state. According to ERCOT, the organisation operating the power grid that serves 90% of electricity demand across Texas, its electricity demand could surge 70% by 2031.

President Trump’s tariffs are causing issues for the renewable energy industry, increasing the cost of solar panel imports, which are mostly produced by China – a main target of the Trump administration’s measures. Further, Trump’s “big, beautiful bill” is causing uncertainty because it cuts subsidies for wind and solar power. The huge subsidies for wind and solar power were passed during the Biden administration in the Inflation Reduction Act of 2022 (IRA).

Much of Texas’s renewable energy industry had paused its projects in April to wait for more clarity on the extent and timing of the tariffs and to see if the federal ‘clean’ energy tax credits would survive the House and Senate bills. The Solar Energy Industries Association, a solar and energy storage trade group, estimated that Texas would lose out on $50 billion in new solar investment over the next decade if federal incentives were repealed, the most of any state. Even smaller developers are starting to cancel projects since they are likely to be the most sensitive to uncertainty.

Bills in the Texas Legislature that clean energy companies called “industry killers” would have also added to the risk of developing a project, however, they failed to pass. Instead, the legislature increased the size of the Texas Energy Fund, created in 2023, by $5 billion to attract developers that want to build new natural gas power plants. The purpose of the low-interest loan programme is to build up a power supply with 10 GW of new gas-fired power generation that can ramp up output to the grid when needed, including when renewable production falls. The Texas Public Policy Foundation issued a report that estimated that clean energy plants are costing the state an additional $2 billion a year because of their volatility and the need to ramp fossil fuel plants up or down at need. Despite the cancellation of projects in May, the growth of energy on the ERCOT grid has not stopped as companies are still requesting to build more megawatts of new power plants and battery. For example, recently, Energy Vault and Jupiter Power announced plans to add a 100 MW battery storage project in the ERCOT region, as increasing electricity demand is creating a need for more batteries to back up solar and wind plants. Nonetheless, it was the worst month for new project development in the region since 2021, signalling that the renewable energy boom in Texas may be