Although many firms are still grappling with the newly issued guidance from the IRS and US Treasury related to foreign entities of concern (FEOC) and prohibited foreign entities (PFEs), a number of stakeholders have weighed in with their preliminary takeaways in dialogue with NPM.

The new guidance, which is only preliminary until it is finalized following a stakeholder comment period taking place through the end of March, is particularly useful for firms seeking clarity on how to safe harbor solar and wind projects to capture federal tax credits ahead of July 4 and storage projects over the long term.

The new guidance confirms the 2023-2025 safe harbor tables shared by the feds last August as an exclusive list firms can use to identify which products and components are in scope for the new requirements with newly assigned cost percentages for these components for renewable projects simplifying the math required to identify whether projects will be compliant. It also notably drops steel and iron from consideration in non-equipment FEOC calculations, providing more clarity for developers and making it easier to calculate the percentage of projects with foreign influence.

However, the new guidance stops short of fully defining still nebulous terms like “material assistance” and “prohibited foreign entities,” with federal agencies saying this will be addressed in future guidance issuances.

Domestic storage manufacturers appear to be largely positive on the guidance. Fluence President and CEO Julian Nebreda said the guidance “provides needed certainty on several key issues related to the PFE restrictions” and that the firm’s initial analysis “confirms our existing interpretation of the statute.”

“We are confident that Fluence’s domestic content product and robust US supply chain will continue to provide a clear and compelling path for our customers to achieve ITC compliance,” Nebreda said.

Act-ion CEO Jin Lim agreed noting that, because his firm’s product is US-based, it will provide developers with a “fully domestic, IRA-aligned supply option” that will help energy storage projects “satisfy federal tax credit requirements while improving supply chain security.”

On the other hand, sodium-ion producer Alsym Energy’s COO Graeme Grant argued that while the new guidance “clarifies the rules, it also highlights a harsh reality: in the current market ‘battery storage’ is essentially a synonym for lithium-ion and lithium-ion is a supply chain that begins and ends with China.”

“For the US to meet its energy goals while complying with these new PFE rules, we have to find a way to break that dependency,” Grant said.

At a panel held this past October 2025, battery storage stakeholders had discussed some of the setbacks the battery supply chain has had in growing in the US.

Global battery producers, for both energy storage and EV, such as Contemporary Amperex Technology (CATL), Gotion and BYD qualify as a “specified foreign entity” at present as a result of being on the OFAC list of companies that make products that benefit from Uyghur forced labor in Xinjiang in Western China, according to a note from the law firm Norton Rose Fulbright.

Grant argues the US has “two paths forward: trying to replicate a domestic lithium-ion supply chain from scratch,” which he says will require “staggering investment and decades of work just to potentially catch up to China’s head start,” or what he calls “the most strategic path” of investing in alternative chemistries like sodium-ion.

“We don’t need to win the last decade’s race,” Grant argued. “We need to lead the next one by choosing a chemistry that is domestic by design.”

Solar developer feedback

For solar developers, supply chain hurdles remain a considerable in 2026, even with supply agreements with US-domiciled manufacturers in place in an industry that is growing.

Treaty Oak CEO Chris Elrod said that while the guidance “generally supports our strategy in how Treaty Oak has proactively pursued certain supply agreements with domestically manufactured supply from OEMs like First Solar, T1 Energy and Nextpower,” he noted developers are still waiting on interpretations of terms like PFEs, specified foreign entities, foreign influenced entities and material assistance.

“Your guess is as good as mine on when we’re going to see that guidance,” Elrod said.

Crux policy head Hasan Nazar agreed that questions remain on what is considered a PFE while Foss and Company Managing Director Bryen Alperin noted the guidance lacked information for materials used in nuclear development. Nazar added that more guidance around ownership and debt structures related to foreign entities remains “unclear.”

Radian Generation Executive VP of Compliance and risk Management Kellie Macpherson said while she “supports the intent” behind FEOC and PFE policy changes, she is advocating for “clear definitions, practical implementation pathways and realistic transition timelines.”

“Policy shifts that impact inverters, battery storage controls and telecommunications infrastructure must account for operational realities, existing asset fleets and compliance obligations already underway,” Macpherson argued. “Protecting the grid while enabling responsible renewable growth requires coordination between regulators, operators and manufacturers and investors to ensure reliability, resilience and long-term system integrity.”

Overall, Alperin predicts the rush to safe harbor equipment before the July 4 construction deadline will likely continue, putting upward pressure on prices even as some developers may struggle to retain tax credits if utility equipment used at the interconnection phase is not PFE-compliant. He also projects some developers may ultimately choose to forego tax credits to utilize Chinese equipment if the price trade-off is workable.