The One Big Beautiful Bill Act included a morass of new rules for companies trying to claim clean energy tax credits. Some of the most restrictive go into effect January 1 — in other words, in about two weeks. And yet the Trump administration has yet to publish guidance clarifying what companies will need to do to comply, leaving them largely in the dark about how future projects will ultimately pencil out.
At a high level, the rules constrain supply chain options for clean energy developers and manufacturers. Any wind, solar, battery, geothermal, nuclear, or other type of clean generation project that starts construction in the new year — as well as any factory that produces parts for these industries in the new year — and wants to claim the tax credits will have to purge their products and facilities of components sourced from “foreign entities of concern.”
Foreign entities of concern, or FEOCs, are companies that are “owned by, controlled by, or subject to the jurisdiction” of foreign adversaries of the United States — namely China, Russia, Iran, and North Korea.
Companies are already subject to rules under the OBBBA that require them to prove that neither they themselves, nor their projects, are influenced or “effectively controlled” by FEOCs. These requirements, too, lack formal guidance from the Treasury, although tax credit experts told me it was somewhat easier to guess at how to comply with them.
Still, this is all a big new costly headache for developers. Before the OBBBA, the only tax credit that came with such constraints was the consumer subsidy for electric vehicles. Companies developing clean energy generation or manufacturing projects in the U.S. could acquire materials, seek out investment, or buy technology licenses from anyone they wanted and still get federal subsidies. Now obtaining the latter two from Chinese entities is effectively banned.
Come January 1, companies will still be able to source materials from China, but only to a degree. Say you’re a battery storage developer that’s trying to qualify for the 48e clean electricity investment tax credit. Starting next year you’ll have to not just ensure but also document that no more than 45% of the value of the material inputs to the project come from a Chinese owned or influenced company. The rules tighten over time, going down to 25% after 2029. (For other types of clean power generation, the starting threshold is 60%.)
All of that would be difficult enough. But the law itself didn’t specify how to calculate that percentage, leaving it up to the Treasury department to provide further instructions. A few days after signing the OBBBA in July, President Trump issued an executive order directing the Secretary of the Treasury to issue guidance for the FEOC restrictions within 45 days of the law’s enactment. That put the due date in mid-August, which came and went with no clarity for clean energy companies.
Storage developers aren’t sure whether they can base their calculations on the value of finished battery cells, for example, or if they’ll also need to consider the origins and values of subcomponents like anodes and cathodes, or even the critical minerals within those parts.
The Treasury Department did not respond to emailed questions about an updated timeline.
“The further upstream you go, the more difficult,” Mike Hall, the CEO of Anza Renewables, a supply chain data and analytics firm, told me. “That’s one of the fears that I’ve heard. You go upstream enough, then it just becomes impossible, at least in the short term.” China currently dominates the supply chain for batteries, controlling more than 95% of global production of key minerals like manganese and graphite and cell components like lithium-iron-phosphate cathodes and anodes.
In the interim, developers are allowed to follow instructions issued by the Biden administration for tallying up the amount of domestic content in a project and apply the same method to calculate the ratio of FEOC-produced materials. But that won’t work for everyone, David Burton, a partner at the law firm Norton Rose Fulbright, told me, since that earlier document only covers wind, solar, and battery generation projects. For companies deploying fuel cells, geothermal power, or renewable natural gas, for instance, “it’s really just, you know, a coin toss as to how the rules are going to work,” he said.
Beckett Woodworth, a manager of federal credits and incentives at the advisory firm Baker Tilly, told me that another point of confusion is whether tariffs must be included in the calculation. Incorporating the cost of tariffs would inflate the value of any products sourced from China, making it much more difficult to meet the prescribed threshold.
All this uncertainty — and the ultimate guidance itself — matters more for some project types than others. Few large-scale wind and solar developers, for instance, will have to contend with the FEOC material restrictions.
That’s because wind and solar farms face another deadline on July 4 of next year. If they start construction before that date, they will have four years to connect to the grid and still be eligible for the investment or production tax credits, known as ITC and PTC. If they start construction after that date, however, they’ll have to race to become operational before 2028 in order to remain eligible. While smaller projects like rooftop and community solar might be able to work within that timeline, it’s likely impossible for utility-scale projects.
“For large-scale projects, if you don’t get started by next July, you’re not going to hit the ITC deadline anyway,” Hall told me. That means most wind and solar developers only really have to worry about complying with the FEOC rules for the next six months.
Many wind and solar developers will already have their hands full come January 1, and may not even try to add more during that six-month period. Everyone I spoke to told me that companies have been racing to safe harbor as many projects as possible before the rules take effect in the new year. According to a safe harbor provision published by the Treasury in August, developers can claim they “started construction” this year as long as they completed “physical work of a significant nature” before January 1. That could include paving a road at a project site or simply placing an order for a major piece of equipment, like a transformer.
“The industry will have a backlog of safe harbored projects to work on,” Burton said. “It’s going to take a while to work through that backlog and actually have this be a problem.” He shared a research note with me from Roth Capital Partners, an investment bank, which forecast that utility-scale solar would continue to grow year-on-year in 2026 and 2027, largely due to the volume of safe-harbored projects. (This prediction was also based on the assertion that there was “potential for a relaxing of the Trump permitting chokehold,” a reference to the administration’s effective moratorium on solar projects requiring federal approvals.)
The picture is a little different for other types of generation and for clean energy manufacturing, because tax credits for those projects extend for several more years. In the energy research firm Wood Mackenzie’s latest U.S. Energy Storage Monitor report, it wrote that storage installations could drop by 10% in 2027 due to uncertainty over the pending FEOC regulations. “Projects that are not safe harbored in 2025 are at risk if additional FEOC-compliant supply does not materialize in the near-term,” the report says.
Hall said that ultimately, the FEOC rules would probably be a bigger issue for manufacturing projects than for power generation, since many U.S. solar and battery factories have some amount of Chinese ownership or licensing deals with Chinese companies. A number of U.S. solar manufacturers have already started to sell their Chinese ownership stakes, according to the trade magazine Solar Power World. And that’s without knowing exactly what the rules will compel them to do.
The biggest open question in all this is whether the Trump administration will use the FEOC guidance as another opportunity to shut down the clean energy industries it doesn’t like. It’s possible to write a version of the rules that make the tax credits impossible to claim, Burton told me, but he’s optimistic that won’t happen. The subsidies’ Republican defenders in Congress, including Senators Chuck Grassley and Susan Collins, would “have a fit,” he said. “So I don't think they're gonna be vindictive about it.”
