US utility Xcel claims tariff exposure is 2% to 3% of capex plan

Executives with the company stated on Thursday that a global trade war is likely to affect renewable energy supply chains and storage systems, exposing 2%-3% of Xcel Energy’s $45 billion plan for capital expenditures.

The expansion of AI data centres and the electrification in industries such as transportation are driving U.S. electricity consumption to record highs. Power companies have increased capital expenditure plans this year to build infrastructure.

The tariffs imposed by President Donald Trump and the reciprocal tariffs of countries such as China have threatened to increase these building costs, especially for renewable energy projects.

Batteries are required to store the electricity generated by solar and wind. This will present a challenge for U.S. companies sourcing storage systems from China. Xcel CEO Bob Frenzel stated this on a conference call with investors.

Frenzel stated that Xcel has only one major battery storage project in progress, but expects to need more batteries as part of its long-term plans.

As power companies try to reduce costs, the new tariffs could shift where batteries are manufactured. Utilities including NextEra this week announced they had increased their rates.

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Battery storage can be purchased from US suppliers.

Frenzel stated that "based on these recent tariff action, we expect to see a relatively quick evolution of the supply chain for batteries".

(source: Reuters)