BloombergNEF warns that the August 26 executive order on grid modernization, combined with Treasury Department Foreign Entity of Concern guidance, will likely trigger significant delays and cancellations in domestic battery and inverter procurement.
The August 26 executive order, alongside prior executive actions and the Treasury Department’s Foreign Entity of Concern (FEOC) guidance, is expected to severely impact battery and inverter supply chains. Effective that date, the order prohibits specified foreign-made batteries, transformers, inverters, and related digital products from connecting to the U.S. power grid. It further grants Energy Secretary Chris Wright the authority to impose conditions on the continued use, operation, maintenance, servicing, or updating of equipment procured or installed prior to that deadline.
This directive builds upon a narrower order signed during Trump’s first term, which barred installations of bulk power system equipment linked to a “foreign adversary.” Both Trump and former President Joe Biden have designated China as such an adversary. According to the International Energy Agency, China controls 80% of global lithium-ion battery supply chain production capacity. Many U.S. battery deployments similarly depend on inverters from Chinese manufacturers. In 2025, these firms supplied approximately 40% of U.S. inverter volumes through production hubs in India and Southeast Asia, according to a BloombergNEF (BNEF) analysis.
The August 26 order compounds existing challenges stemming from the Treasury Department’s FEOC rules, finalized in February, BNEF trade and supply chains analyst Zoe Zakrzewska told Utility Dive in an email. Authorized by the One Big Beautiful Bill Act, those regulations limit the extent to which U.S. equipment producers and energy project developers can rely on Chinese-affiliated firms in their supply chains while remaining eligible for federal manufacturing and investment tax credits.
“Battery energy storage systems and inverters are the two technologies that are clearly subject to both of these sets of rules … [but] the new EO has the potential to be far more punishing,” Zakrzewska said. It “could likely be the nail in the coffin for Chinese battery and inverter manufacturers selling in the US market: while the FEOC rules allowed some room for Chinese firms to adapt, the [bulk power system] EO can easily shut out these firms for good,” she added.
The risk extends to project developers as well, since the executive order could impact projects that broke ground before the January 1, 2026, deadline for FEOC compliance but have not yet commenced operations, Zakrzewska noted. In the interim, BNEF observed that developers who have procured but not yet installed battery equipment may pause progress until the administration clarifies the order’s application—a step Zakrzewska expects will occur eventually. BNEF added that developers are likely to cancel entirely any projects rendered uneconomical by the ban on lower-cost Chinese imports.
Electrical equipment manufacturers have responded cautiously. Bridget Bartol, head of industry and regulatory affairs at the National Electric Manufacturers Association, told Utility Dive on Thursday that “there’s a need for a lot more clarity,” particularly regarding the order’s implications for software products. “I think there’s going to be a lot of dialog between the industry and the administration,” Bartol said.
Zakrzewska cautioned that the long-term impact of the order may be mitigated by new manufacturing capacity coming online in the United States and in nations exempt from the directive. Four battery plants have already entered operation in the U.S. this year, with “a few more expected by year-end.” Manufacturers may view the policy shift as an opportunity to expand domestic battery and inverter production capacity in the coming years, Zakrzewska added.