Return error when the template's single interpolation results in null value

.changes/v1.12/BUG FIXES-20250310-093153.yaml

@@ -0,0 +1,5 @@
+kind: BUG FIXES
+body: Return error when the templatestring function contains only a single interpolation that evaluates to a null value
+time: 2025-03-10T09:31:53.479704+01:00
+custom:
+    Issue: "36652"

internal/lang/funcs/string.go

@@ -380,6 +380,14 @@ func makeRenderTemplateFunc(funcsCb func() (funcs map[string]function.Function,
 		if diags.HasErrors() {
 			return cty.DynamicVal, diags
 		}
+		if val.IsNull() {
+			return cty.DynamicVal, &hcl.Diagnostic{
+				Severity: hcl.DiagError,
+				Summary:  "Template result is null",
+				Detail:   "The result of the template is null, which is not a valid result for a templatestring call.",
+				Subject:  expr.Range().Ptr(),
+			}
+		}
 		return val, nil
 	}
 }

internal/lang/funcs/string_test.go

@@ -273,6 +273,28 @@ func TestTemplateString(t *testing.T) {
 		want         cty.Value
 		wantErr      string
 	}{
+		{ // a single string interpolation that evaluates to null should fail
+			`template`,
+			map[string]cty.Value{
+				"template": cty.StringVal(`${test}`),
+			},
+			cty.ObjectVal(map[string]cty.Value{
+				"test": cty.NullVal(cty.String),
+			}),
+			cty.NilVal,
+			`<templatestring argument>:1,1-8: Template result is null; The result of the template is null, which is not a valid result for a templatestring call.`,
+		},
+		{ // a single string interpolation that evaluates to unknown should not fail
+			`template`,
+			map[string]cty.Value{
+				"template": cty.StringVal(`${test}`),
+			},
+			cty.ObjectVal(map[string]cty.Value{
+				"test": cty.UnknownVal(cty.String),
+			}),
+			cty.UnknownVal(cty.String).RefineNotNull(),
+			``,
+		},
 		{
 			`template`,
 			map[string]cty.Value{