Federal clean energy tax incentives now include restrictions tied to Foreign Entities of Concern (FEOC). Energy storage projects seeking clean energy investment tax credit (ITC) after January 1, 2026, must comply with FEOC supply chain restrictions.
Balancing cost and risk post-FEOC
Headline price and performance are no longer the most important contracting considerations for energy storage projects. U.S. manufacturing incentives and ITC-driven economics make China-imported batteries less cost-effective in the U.S. market. The lowest quoted price may not represent the risk-adjusted cost.
Alongside pricing, contracting developers and investors should consider:
Compliance certainty and policy alignment
Execution timing and delivery risk
Long-term serviceability
Financing implications
Securing meaningful non-FEOC battery volume will require early commitment. Developers targeting a 2027 commercial operation date should be ready to contract by early H2 2026 at the latest to secure preferred suppliers and pricing. OEMs are assisting with the decision-making process by:
Engaging third parties to prepare non-FEOC reports or certifications
Assembling non-FEOC documentation packages early in the sale process
Offering liquidated damages or cancellation flexibility tied to non-FEOC qualification outcomes
Developers still have flexible options despite FEOC rules. FlexGen is collaborating closely with OEMs across the U.S., China, Southeast Asia, Europe, and beyond to provide support, whether you are managing a safe-harbored or non-ITC project, want to move forward with emerging domestic supply, or need a FEOC-compliant alternative.
There are three primary supply options for projects targeting 2026 and 2027.
Option 1: Existing safe harbor or non-ITC project
Most 2026 projects moving forward today are those that already secured safe-harbor status before the FEOC rule took effect, allowing for broader sourcing flexibility. Developers with safe-harbored projects or projects that do not require ITC eligibility can continue working with a wider range of suppliers, including those connected to China. FlexGen helps safe-harbored and non-ITC projects overcome primary challenges related to logistics and delivery execution.
Option 2: Securing limited but growing U.S. supply
U.S. domestic battery manufacturing is growing in response to federal incentives and long-term energy security priorities, but supply could still be limited. Global OEMs from Korea, China, and the U.S. are expanding domestic production footprints and restructuring supply chains to support U.S. energy storage demand and comply with FEOC policy requirements.
Most announced facilities are still under construction or in early production phases. Manufacturing capacity will continue to scale over the next several years and improve long-term supply security. Approximately 80-100 GWh of FEOC-compliant battery is planned for the U.S. market in 2027; however, factory start-up dates may slip, and ramp-up timelines could reduce near-term available volume. More stable supply is expected by 2028.
Option 3: Bridging U.S. supply with established capacity from Southeast Asia
Not all OEMs are moving directly into U.S. manufacturing first. Southeast Asian manufacturing hubs are gaining attention as battery companies diversify production outside of China. Southeast Asia-based production strategies use regional battery cells and assembly that:
Qualify for FEOC compliance
Offer improved tariff positioning relative to China
Require lower capital and operating investment than immediate U.S. cell manufacturing for OEMs
While some Southeast Asian manufacturers maintain links to Chinese supply chains or ownership structures, some suppliers are actively working to transition to compliant operations by building regional supply chains to meet ITC requirements.
For many projects, Southeast Asia serves as a bridge strategy, supporting compliant supply while U.S. capacity scales up.
FlexGen gives customers supplier optionality
As battery supply from the U.S. and Southeast Asia comes online, early commitments will likely be prioritized. Project owners targeting a 2027 commercial operation date should plan for contract readiness in H1 or early H2 2026.
FlexGen is ready to bring FEOC and non-FEOC suppliers to contract, depending on your project goals. Our existing relationships with over 30 global OEMs and more than 20 U.S.-based battery companies across multiple chemistries, along with our hardware-agnostic approach, enable developers to compare suppliers and decide whether a FEOC-compliant solution is needed.
As domestic battery manufacturers expand production and global supply chains evolve toward FEOC compliance, the range of compliant battery options for energy storage projects will grow. Until domestic capacity fully scales, early supplier engagement and clear visibility into supplier documentation remain essential to securing FEOC-compliant battery supply.
Select the best solution that aligns with project timelines, financing requirements, and technology needs. FlexGen’s global supply chain specialists, system engineers, project managers, integration experts, and service team can help you design, source, and deploy your storage solution that meets project goals. Contact us to get started.
