Applications: Stationary Energy Storage
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Sources and links on page 224 (7)
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- https://www.projectfinance.law/publications/2025/july/working-through-the-feoc-maze/?utm
- https://www.projectfinance.law/media/6082/nrf-presentation-a-practical-discussion-of-feoc-rules-10012025-revised-100125-2504922632.pdf
- https://eticaag.com/feoc-and-the-itc-keep-your-bess-project-eligible/
- https://www.reuters.com/business/autos-transportation/samsung-sdi-says-discussing-supplying-tesla-with-ess-batteries-nothing-decided-2025-11-03/
- https://www.reuters.com/business/autos-transportation/lg-energy-solution-warns-slowing-ev-battery-demand-due-us-tariffs-policy-2025-07-25/
- https://www.reuters.com/business/energy/south-koreas-sk-signs-energy-storage-battery-supply-deal-with-flatiron-energy-2025-09-03/
- https://www.spglobal.com/market-intelligence/en/news-insights/research/2025/10/nearly-two-thirds-of-planned-us-bess-projects-eligible-for-40-tax-credits
Text on page 224
Updated IRA Investment Tax Credit Guidelines (FEOC)
FEOC definition: “Foreign Entities of Concern” are companies owned, controlled, or significantly influenced by foreign adversaries (e.g., China, Russia, Iran, North Korea). 2 types:
Specified Foreign Entities (SFEs): Directly owned or controlled by hostile governments.
Foreign-Influenced Entities (FIEs): Indirectly influenced via board control, debt, licensing, or IP agreements.
Material Assistance Rule: Prohibits projects from receiving significant cost contributions from FEOCs – financial support counts, not just physical components.
Material Assistance Cost Ratio (MACR): Defines the share of system cost that must be FEOC-free to qualify for ITC
Policy impact: Projects tied to FEOC-linked suppliers may become ineligible for federal tax incentives, including the Investment Tax Credit (ITC).
Relevance to BESS: The globalized battery industry is especially vulnerable, with major suppliers like CATL, BYD, and Gotion potentially triggering FEOC restrictions.
High-risk supply areas: Extraction and processing of critical minerals (lithium, cobalt, graphite), production of cells/modules, BMS components, and inverters/control systems.
Key vulnerability: Even if direct suppliers are compliant, upstream sub-suppliers may not be, requiring deep supply chain due diligence
100% recapture risk: Any payment made to a SFE or FIE within 10 years of claiming the credit triggers full ITC clawback, effectively creating a 10-year exposure period for recapture.
Industry response: Non-FEOC companies with U.S. cell/module manufacturing are pivoting from EVs to BESS, including Samsung in Indiana, LG in Michigan, and SK in Georgia.
Source: Norton Rose Fulbright, Norton Rose Fulbright, EticaAG, Reuters, Reuters,Reuters, S&P Global
Major Battery Energy Storage System Milestones under H.R.1
See the Policy section for wider commentary on US ESS-related policies.
Extracted from the PDF; charts and images may read imperfectly.
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