Key takeaways:
- Data centre opposition could dampen near term BESS demand
- The solar and storage policy outlook is mixed in the short term, and clarity remains some months away at least
- State level policy will likely become more favourable to solar and storage build out
- Electricity affordability became a key campaign issue during the midterm elections, putting rising power prices in the spotlight
This Insight examines how the recent US election results could affect solar and storage buildout. It explores the role of electricity affordability in the election, what mounting data centre opposition could mean for BESS buildout, as well as the outlook for state and federal energy policy.
The US midterm elections in early November 2026 put greater focus on affordability, which may support solar and storage deployment amid rising electricity demand, but some important questions remain unanswered.
Anti-data centre sentiment also featured in the election, with exit polling showing that 56% of voters said data centres played a major or crucial role in how they voted. Data centre demand will be a key driver of battery energy storage system (BESS) buildout in the US, but we now anticipate slower growth in data centre deployments.
Additionally, the overwhelming Democratic victory adds further uncertainty to the fate of the Bipartisan American Affordability and Jobs Act (BAAJA), putting BAAJA at risk as Democrats could now hold out for more permitting concessions. Pro-renewable candidates did well, and an extension of solar and storage tax credits (such as 45X) may have a clearer path forward than broader clean energy tax credit restoration. Overall, the election results represent a moderate upside case for solar and storage deployment, but key uncertainties remain.
Rising power prices played a key role in campaigns
Across the country, cost of living and the economy were the main issues on the campaign trail. Among the most important problems was affordability of electricity prices. Residential prices rose 13.9% in the year-to-date (YTD) August. In states that flipped a senate seat, not including Mississippi or Alaska, the price increase was even more dramatic at over 20% on average. Although not the only factor behind these seats flipping, above-average electricity price increases were a notable example of cost pressures that hurt incumbents.
Data centre opposition poses a risk to demand outlooks
Data centre opposition played a major role at all levels. In one of the biggest upsets of the night in Indiana’s 5th district, Democrat J.D. Ford attacked incumbent Republican Victoria Spartz for making Indiana “one of the most data centre friendly states in the country”.
At the governor-level, Georgia governor-elect Keisha Lance Bottoms called for an immediate statewide freeze on data centres. Gina Hinojosa, the governor-elect in Texas, also called for an immediate data centre moratorium until the state legislature can meet to put protections in place. According to CRU data, these two states combine for nearly 25% of data centres expected to be built by end-2027. A pausing of data centre construction in these states would represent a headwind to short term BESS buildout.
Out of the 39 data centre specific referendums on 3 November, 38 of the elections voted to impose some sort of moratorium or restriction on data centres, with many of the anti-data centre initiatives earning over 70% of the vote.
Published prior to the US midterms, CRU’s Energy Storage Technology and Costs Outlook forecasted that over a third of US grid-scale BESS deployed in 2030 would support data centre demand, primarily from the interpolation application. Extended moratoriums across the country could slow data centre BESS buildout and pose a demand risk in the medium-term.
Policy uncertainty remains
The tension between electricity demand growth and local data centre opposition now feeds directly into the policy outlook for solar and storage. The election results are likely to embolden Democrats to push for more clean energy support and fewer oil and gas pipelines in the recently proposed Bipartisan American Affordability and Jobs Act (BAAJA), putting BAAJA at risk.
The bill has received approval from major congressional leaders on both sides as well as President Trump. Prior to the election, the leading Democrat in the House Natural Resources committee, Jared Huffman (D-CA), outlined major objections to the bill, suggesting that Democrats hold out until a new congress is sworn in and negotiate a more renewable-friendly bill. The day after the election, Senator Mark Kelly (D-AZ) came out with a similar stance. On the other side, bill authors Senator Martin Heinrich (D-NM) and Senator Sheldon Whitehouse (D-RI) have urged Democrats to continue supporting the bill.
The bill’s passage could speed permitting of new energy projects and buildout of transmission lines – two changes that could lower costs for solar and storage and expand buildout. BAAJA’s first test is a cloture vote in the Senate on 9 November. Should the bill pass the Senate, it faces a potentially convoluted path through the House before President Trump would sign the bill. Any major changes to the bill are unlikely to be approved by President Trump, leaving it in a tenuous position.
While the industry remains split on the potential return of solar and storage tax credits, Democrats are likely to continue their push to expand clean energy.
Many large solar and storage developers oppose reinstating the original Inflation Reduction Act (IRA) tax credit structure, preferring to compete without ongoing policy support and reduce the sector’s exposure to political uncertainty.
Smaller developers and many behind-the-meter installers would instead like an extension of the tax credits as the industry faces other headwinds, such as trade actions.
Other options remain to help expand clean energy, such as a transmission tax credit that would lower the cost of transmission expansion and grow solar and storage deployment in the US.
On the supply chain side, the industry overwhelmingly supports the expansion of the 45X production tax credit.
For solar, the polysilicon Section 232 case raised the price of module imports to a minimum of 38 c/W, but this remains below a fully US-made module, as shown in CRU’s Solar Technology and Costs Outlook. The US has enough module manufacturing capacity to serve the entire domestic market, but upstream manufacturing still needs additional policy support to continue its buildout.
For batteries, modelling in CRU’s Energy Storage Technology and Costs Outlook details costs for an LFP-AC BESS system, using US-made components. It remains significantly more expensive than a similar product that uses Chinese components, even when including tariffs and tax credits.
To help the industry remain competitive and profitable, expanding 45X is a key tool that politicians could use. This expansion could include extending the period during which tax credits remain in place, imposing stricter restrictions on foreign-made storage parts, adding components that receive the 45X tax credit and/or increasing the amount of the tax credit.
One of President Trump’s main campaign promises in every election has been the reshoring of US manufacturing. Of all the tax credits that could return over the next two years, 45X is the one that is most likely to be expanded and extended beyond the provisions laid out in OBBA.
State level election results could create a more favourable environment for clean energy deployment. From January 2027, nearly 75% of Americans will live in a state with a Democratic governor, and Democratic leaders have historically been more supportive of clean energy development. While eight out of the ten states with the highest levels of solar installations in 2026 are governed by Republicans, state level policy proposals have threatened buildout in these states in the past. New leadership in these states, such as in Texas and Nevada, could further bolster buildout.
Recent major state-level clean energy policies have been signed into law by Democratic governors such as the Clean and Reliable Grid Affordability Act (CRGA) in Illinois and major clean energy legislation in Michigan. In Ohio, Governor-elect Dr. Amy Acton campaigned partially on lowering electricity costs through low-cost renewable energy deployment. In Texas, a change in state leadership could bolster solar and storage deployment after previous proposals had pushed to restrict development.
For developers, the key question is whether political shifts lead to concrete changes that can grow solar and storage deployment. Overall, state level results demonstrate a mild, but not transformative upside for solar and storage buildout.
While the results bode well for increased renewable energy support, the overall policy outlook is mixed and does not deliver a clear message for the short to medium term impacts on solar and storage. While storage deployed to data centres in states such as Texas and Georgia could falter, state level policy support could support grid connected buildout in these states and others, such as Ohio.
Federal election results may create opportunities for continued manufacturing support and limit any further repeals of clean energy tax credits, representing a moderate upside case for solar and storage deployment across the country.
Staying up to date on price changes, data centre demand and policy updates will be key for CRU clients to understand the market and its direction in the coming years. For more information on our Energy Storage, Solar, and Battery services, please get in touch.
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