Thanks solely to the Trump administration’s ongoing fascination with playing tariff roulette,the price of doing business in the United States is(probably,maybe,or not,who knows)going up for many companies in the energy industry.
The back-and-forth nature of the duties,many of which are in the middle of a 90-day pause following their sudden implementation,adds an extra layer of uncertainty that makes matters more complicated than simply finding a way to absorb increased procurement or manufacturing costs.
As a result,major power players are having to make some tough calls,and they’d rather be safe than sorry.
Global energy storage company Fluence,a Siemens and AES company,has decided to pause some of its U.S.projects under existing contracts and to defer entry into pending contracts until there is“better visibility and certainty on the tariff environment.”
Fluence has,in turn,revised its fiscal year 2025 to reflect the“currently anticipated impact of ongoing economic uncertainty in the U.S.market,caused particularly by tariff policy that led to what the company expects is a temporary deceleration in its U.S.customer contracting activity.”
The energy storage and software firm’s fiscal year 2025 revenue is now expected to be between$2.6 billion and$2.8 billion(midpoint$2.7 billion),down from the previous range of$3.1 billion to$3.7 billion(midpoint$3.4 billion).Fluence attributes the$700 million reduction at the midpoint primarily to mutual decisions made during the second quarter by the company and its customers to pause projects.Fluence reports that its updated revenue midpoint is approximately 95%covered by its current backlog and fiscal year-to-date revenue.
The company is also lowering its fiscal year 2025 Adjusted EBITDA guidance to a range of$0 to$20 million(midpoint$10 million),from the prior range of$70 million to$100 million(midpoint$85 million).The decrease is attributable not only to the paused projects and accompanying$700 million reduction in revenue outlook,but also to an approximate$20 million of anticipated incremental impact from recently enacted U.S.tariffs.
“The evolving trade and tariff landscape has created significant uncertainty in the U.S.market,which has led us to agree with our customers during the second quarter to pause certain contracts both under execution and those we expected to sign until we have better visibility,”confirmed Julian Nebreda,Fluence’s CEO.“As a result,our order intake for the quarter was below initial expectations,reflecting this dynamic.Over time,we expect our domestically sourced solutions to benefit from higher tariff levels.”
“We remain confident in the long-term growth trajectory of the energy storage industry,and believe that we are well-positioned to deliver value to our customers through our rapid innovation strategy,differentiated supply chain,and product development,which are reflected in our market-leading U.S.domestic content offering and our Smartstack product,”Nebreda added.
In its latest financial report,Fluence reaffirmed its fiscal year 2025 annual recurring revenue(“ARR”)guidance of approximately$145 million.
In the last few years,the company has rapidly expanded its U.S.footprint,manufacturing battery modules in Utah,working with solar suppliers in Tennessee,and deploying gigawatts of utility-scale battery energy storage systems(BESS)in partnership with independent power producers(IPPs)like Cordelio Power.
“Our laser-focused approach yielded double-digit adjusted gross profit margin for the quarter and approximately$1 billion in liquidity,in line with our expectations,”noted Ahmed Pasha,Fluence’s CFO.“We are navigating this challenging environment from a position of financial strength,and we are concentrating on what we can control:maintaining robust liquidity,managing our operating costs,and collaborating with our customers to create long-term value for our shareholders.”
Others Scaling Back
Fluence,which could be facing cost increases of 2x or more on some projects,is far from alone in having to backpeddle on previous market assessments in the wake of tariff quakes.
GE Vernova recently reported healthy earnings in the first quarter of 2025,but acknowledged the anticipated impact of sweeping U.S.tariffs and other macroeconomic pressures.The electrification giant reaffirmed its annual revenue forecast of$36 to$37 billion but estimates a cost impact of$300 to$400 million resulting from tariffs.
“While our end markets remain strong,we are not immune to the complexity at play,given the current outline of tariffs and resulting inflation,”noted GE Vernova CEO Scott Strazik.
The company is actively working on tariff mitigation strategies,such as passing through costs or renegotiating contracts where‘change in law’provisions may apply.GE Vernova also said it would consider shifting supply chains,especially away from China,where the tariff rate is substantially higher than for other countries(145%at last check).
The company also cited continued investments for a more resilient supply chain.In January,GE Vernova announced plans to invest$600 million in its U.S.factories over the next two years to help meet surging electricity demand around the world.The new investments are expected to create more than 1,500 new U.S.jobs.
Leaders from eight of the largest U.S.utilities each noted tariff concerns in their Q1 earnings calls,but anticipate some proactive measures and reworked supply chains will spare them from the tip of the blade.
Bob Frenzel,President and CEO of Xcel Energy,said the utility estimates a total tariff exposure of 2-3%on its$45 billion base capital plan for 2025 to 2029.He thinks damage could be limited through any incremental mitigation actions taken with vendors.
“The impacts are both modest and manageable,”said Frenzel,adding that“a majority”of the utility’s material-based capital expenditures are sourced in the U.S.
FirstEnergy’s tariff exposure represents less than 0.2%of its$28 billion capital investment program,utility President and CEO Brian Tierney told investors on FirstEnergy’s Q1 earnings call in late April.
“We expect any meaningful increases in our CapEx program to be driven by increased investment opportunity rather than supply chain pricing,”said Tierney.
Southern Company similarly projected confidence when discussing possible tariff impacts.
“Among the advantages for a company of our scale is a large portfolio of suppliers and strong vendor relationships to help navigate such challenges collaboratively and proactively,”said Southern Co.CEO Chris Womack.
