Energy-Storage.news Premium speaks with Thomas Cornell, CEO and President of Prevalon Energy, at the RE+ 2025 trade show, about the global consequences of the budget reconciliation bill for BESS and renewables.
The ‘One Big Beautiful Bill’ Act (OBBB) maintained the same timelines for energy storage tax credits, but restrictions on foreign entities of concern (FEOC) regarding technology procurement and changing tariff policies greatly raise the risk of sourcing energy storage components outside the US.
Prevalon Energy’s main battery energy storage system (BESS) contract manufacturer is China-based Clou Electronics.
In July, speaking with ESN Premium, Prevalon’s CTO Alejandro Schnakofsky shared his opinions on the impact of US tariffs on China and the OBBB on the BESS industry, stating it remains “too early to tell.”
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Cornell expands on this and offers insight into what Prevalon is doing to try to secure its business not only in the US but globally.
The company has multiple projects in Chile and is looking to expand its offerings in the country.
In October 2023, Prevalon delivered the 50MW/250MWh Salvador 1 BESS to developer and operator Innergex.
In May 2024, the company delivered the 35MW/175MWh San Andres 1 BESS to Innergex. Both projects are situated in Chile.
In November 2024, it was announced that Prevalon would also provide the BESS for separate grid-connected projects co-located with the San Andres 1 and Salvador 1 projects.
Market Impacts
Prevalon’s President says, “I wouldn’t say it’s business as usual for sure. OBBB is definitely going to have some impacts.”
“Our project mix includes hybrid with solar and standalone storage projects. The customers doing hybrid projects are trying to figure out their long-term path. Near term, everybody’s doing the same thing—Safe Harbour. We’re going to have a backlog of Safe Harbor projects that will carry us for some time, while we all figure out what we will do with the supply chains and what we will do longer term.”
“In parallel with that, we’ve also got the data centre market, which has really taken off, and that’s compensating for what we’re seeing with the slowdown with OBBB,” he notes.
BloombergNEF analyst Isshu Kikuma noted that forecasts indicate a significant load growth over the next decade, mainly fuelled by data centres. This growth is so substantial that it will likely require substantial involvement of energy storage to meet the demand.
Prevalon is currently working on two data centre projects, each of which, Cornell notes, will be greater than 1000MWh.
The CEO says, “They’re very large projects with different use cases for the batteries. The batteries on those are going to be anywhere from probably 500MW to 600MW with a two-hour duration.”
“The gas turbines are going to be at base load, so they’ll be fixed, but the data centre load swings based on the level of computing that’s going on, and the batteries are going to be there to pick up and match the load.”
However, data centres’ rapid development is causing interconnection delays.
As noted by market intelligence firm Wood Mackenzie in June, “Since October, the long load queues have grown even longer. Wait times for grid connection have increased.”
This creates a larger issue for markets like the California Independent System Operator (CAISO), which, in 2024, had changes approved to its interconnection process by the Federal Energy Regulatory Commission (FERC), in large part because the sheer number of interconnection requests was becoming unmanageable.
Cornell expresses concern over the possibility of further delays, stating, “I think everybody’s been following the existing process, but now the question is, are they going to declare an emergency?”
He continues, “Then, the data centres are going to move to the front of the line, or some of these gas assets are being moved to the front. Especially now, the government has really hampered wind and solar. Most of the queues, if you look at them over the next five years, are flooded with wind and solar energy, mainly solar projects, and then gas is beyond that.”
“Now, you take solar out of the mix, and you cannot build gas generation fast enough. What are people left to do?”
The Prevalon CEO also expressed frustration at the Trump administration’s executive order on wind energy projects and actions such as the Bureau of Ocean Energy Management issuing a stop work order for the nearly complete Revolution Wind project.
“Cancelling a wind project that’s 80% built raises questions. That’s important generation capacity we need. Even if wind isn’t your preference, stopping a project this advanced doesn’t make sense. A reasonable compromise and phased approach should be considered, allowing the market time to adjust. Phasing out energy sources gradually is better than abrupt cancellations.”
Cornell continued, “I’ve worked in nuclear, coal, gas, renewables, everything. You’re not going to build new nuclear in the next 10 years. You’re not going to build new gas in the next four or five years. That’s not going to happen, period.”
At least in the case of the Revolution project, a federal judge recently lifted the stop work order, and construction is planned to resume shortly.
The administration has also caused a significant stir for energy storage supply chains, in an effort to encourage US domestic manufacturing.
Contract manufacturing
Cornell says that Prevalon uses contract manufacturing with Clou Electronics as well as manufacturing companies in the US and “areas of Southeast Asia, parts of North America.”
He says, “For the US, with OBBB, it’s basically a blending of product ratios that we’ve got to manage. How do we dance and do that blending in the most efficient way possible?”
FEOC restrictions stipulate that individuals or entities receiving material assistance—such as products and services—from the designated countries in the bill above a certain threshold will be ineligible for tax incentives. This policy is anticipated to broadly impact Chinese companies or those with more than 20% Chinese ownership starting from the end of this year.
Cornell explains of Prevalon’s take, “We still need the guidance. We don’t have true guidance on how to interpret the bill. Unlike other bills passed in our industry, it’s very specific, but there is still some guidance necessary when it comes to ownership structures, blending ratios, use of raw materials, and traceability.”
He highlights, “Some of the manufacturers we were talking to in the US that are Chinese are going to have to sell down their facilities, like 80% to get under that 20% threshold. We don’t know the rules around that. What’s the new ownership structure look like? Who could it be? Who could it not be? There are still a lot of unknowns.”
While much of the conversation on FEOC, tariffs, and manufacturing applies to the US and China’s energy storage markets, the consequences are felt globally, which Cornell expands on.
“We’re going to keep our supply chain in China for projects outside the US that don’t have to worry about the tariffs. Everything we’re doing in Chile and Latin America, projects in Canada, and some in Europe.”
Another concern is Chinese manufacturers dumping products that would have formerly gone to US companies.
Cornell says, “Some markets are just emerging now to allow batteries to participate in grid scale. This year is a big year, especially in some countries in Latin America. Brazil is having their first capacity auction which is allowing batteries to participate. Argentina is following behind that.”
He explains further, “Because of what the US has done, the Chinese market was number one, the US was right behind it at number two, and then the rest of the world was way down. Now that all this Chinese supply chain can’t come into the US, it’s going into these other markets, which are getting flooded. We’re worried it’s going to be a race to the bottom with people dumping products.”
When the Brazil BESS auction was announced in 2024, the Brazilian minister, Alexandre Silveira de Oliveira, said: “The purpose of the battery auction is to boost battery technology in Brazil and try to bring Huawei and other large battery producers, mainly from China and other countries, to be able to bring technology to Brazil.”
