The US Is Losing the Electrification Race to Asia

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(Bloomberg) — The US is lagging developing nations in Asia in the race to electrify — and that gap may increase if lawmakers decide to add duties on new solar and wind farms to pay for President Donald Trump’s tax cuts.

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A new report from clean energy think tank Ember finds that countries such as Vietnam and Bangladesh are growing their share of electricity in the total energy mix faster than the US. Since 2000, China has doubled electricity’s share as a proportion of primary energy to nearly a quarter, while the US and Europe have stagnated.

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“Electrification is the more consequential race today” for countries looking to grow their economies, says Daan Walter, researcher at Ember. Electricity doesn’t just help increase efficiency and lower costs of operation, he says. Industries supporting electrification, such as electric-car manufacturing and heat-pump installers, are also growing faster than other sectors.

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The report comes as the US Senate continues to debate a tax and spending bill. A group of Senate Republicans is pushing to soften an aggressive planned phase out of subsidies for wind and solar projects in the package. An amendment being circulated would also do away with a proposed new excise tax the Senate bill would slap on wind and solar projects that use components from China and other “foreign entities of concern.” 

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“A massive strategic error is being made right now to damage solar / battery that will leave America extremely vulnerable in the future,” once strong Trump ally Elon Musk, chief executive officer of Tesla Inc., said on his social-media platform X on Sunday. If the latest draft of Trump’s tax bill becomes law, he added, it “will destroy millions of jobs in America.”

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Most Asian nations are importers of fossil fuels, which makes electrification and adding renewables an economic imperative. As the world’s largest producer of oil and natural gas, the US seemingly doesn’t have the same economic incentives. 

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And, yet, the country’s electricity demand is becoming tougher to meet with data center power consumption from artificial intelligence on the rise.  Shortages of equipment and people, alongside regulatory hurdles, are making it hard to build the energy supply.  

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Meeting growing power demand is pushing Asian economies, even outside China, to build out the manufacturing sector for basic grid equipment, such as transformers and cables. Vietnam and Indonesia rank high in Ember’s report on countries that are rapidly electrifying, while others including India, Pakistan and Sri Lanka are outperforming with solar and wind power’s share of the grid mix.

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Walter said the lag in electrification is a lost opportunity for developed countries. “Renewables can make electricity cheaper,” he said. “Electrification upgrades the everyday technologies households rely on — cars, heating and control systems — and delivers savings.”

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Read Bloomberg Green’s series on bottlenecks to the energy transition: Part 1 and Part 2. 

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—With assistance from Steven T. Dennis, Erik Wasson and Jennifer A Dlouhy.

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