The changing political winds in Washington can feel like whiplash for renewable energy. Under the Biden administration, the Inflation Reduction Act channeled enormous subsidies to solar and wind energy, including generous tax credits worth $127 billion. The new Trump administration has quickly replaced this largesse with a stranglehold. It immediately paused approval for renewables on federal land, and attempted to pause or rescind billions of dollars of grant funding and loans to renewable energy projects.
It's tempting to think that the new federal turn spells disaster for clean energy. But in the long run, these shifts may not be as disruptive as expected. That’s because the U.S. is just one player in a global transformation that is accelerating— one that no single government can meaningfully slow, let alone stop.
Around the world, solar, wind, and battery storage are scaling at an unprecedented pace, driven by economics rather than politics. In 2010, over 80% of new electricity generation capacity installed worldwide was in traditional energy, primarily natural gas and coal. By 2023, this had flipped to be 86% renewable energy, with solar alone accounting for 62%. 20 years ago, the world was building 1 GW of solar power every year. In 2024, it was building over 1 GW every single day.
The scale of this growth is almost hard to grasp. To take one example, China recently announced plans to dam the Brahmaputra river in order to generate hydroelectricity. The capacity of this new dam would be a stunning 60 GW, almost three times as large as the current world-record holder, the Three Gorges Dam. A plant that size could generate enough electricity for 27 million American households. However, it will likely take up to a decade to construct and test. Meanwhile, China installed almost 280 GW of solar capacity in a single year in 2024.
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While China is the clear world leader for sheer scale, all across the world we are seeing the same patterns. India is now the third largest producer of solar power, after the U.S. and China. In the last 10 years, coal-burning Australia went from having 5% to 36% of its energy coming from the sun and wind. In the same timeframe, Germany hit 47%, Chile 42%, and Spain and the Netherlands 40%. Households in Pakistan installed so much behind-the-meter solar last year that total grid demand plummeted 10%.
The new economics of renewable energy driving this change is dominated by three concerns: cost, storage, and time to build. When it comes to cost, the debate is over. Renewables are the cheapest source of bulk new supply almost everywhere on the planet. Their costs have fallen astonishingly fast, by 90% for solar in the last decade and 70% for wind.
The reason behind this is a process common to many manufactured goods. Increased production scale gives rise to lower unit cost. Lower cost then increases the number of markets where the technology can compete, driving further increases in production. This process has many names, but for solar it is often called Wright’s Law, and it has overseen rapid cost reduction on the order of 20% a year for decades.
Crucially, however, renewables are intermittent. The sun is not available at night, and wind energy can disappear for days at a time. As renewables account for a larger share of generation, storage becomes ever more important.
Fortunately, the good news on this has been unrelenting. The same process of rapid cost reduction is playing out with lithium-ion batteries, which have declined in price by 97% in three decades. As a result, they have quickly become commercially viable. In California, large batteries now supply 20% of the state's evening demand—something unimaginable just three years ago. Texas, hardly a climate champion, is seeing similar explosive growth in storage, with capacity doubling every year since the pandemic.
In fact, over 50 per cent of solar projects in the interconnection queue in the U.S. now include storage, enabling them to sell electricity at more high value times like the evening, and shore up the grid when needed. Battery cost reductions are only expected to accelerate as electric vehicles roll out globally, driving further increases in production scale for lithium-ion batteries.
The last concern driving renewable uptake is how quick they are to build compared to fossil fuel infrastructure. Build times for solar, storage and wind are currently around 18 months. Fossil fuel infrastructure is much slower to construct. NextEra Energy CEO John Ketchum recently noted that “To get your hands on a gas turbine and to actually get it built across the market, you’re really looking at 2030, or later.” Nuclear, of course, takes even longer to build given stringent regulatory hurdles. To meet the expected boom in U.S. demand from AI data centers and electrification, faster renewable rollout will account for the bulk of new supply.
The newly announced U.S. tariffs, if held in place, will certainly mean a rocky 2025 for US renewables. The high tariffs on Vietnam and Thailand in particular will hurt U.S. solar developers, and U.S. factories will not be able to fully compensate for panel imports from these countries.
But in the longer term, tariffs are likely to be nothing more than a speedbump. Despite political headwinds, the energy future is not being shaped in Washington, but in factories, supply chains, and research laboratories around the world. Like the shift from landlines to mobile phones, the global move to clean energy is now driven by practicality and cost. Governments may slow it or redirect it — but they can no longer stop it. Welcome to the age of renewables.
Conor Walsh is an Assistant Professor of Business, Economics Division at Columbia Business School.
