An FEOC-compliant battery is one manufactured without involvement from Prohibited Foreign Entities (PFEs) — entities owned, controlled, or directed by China, Russia, Iran, or North Korea. For battery energy storage system (BESS) developers, choosing FEOC-compliant batteries is now a prerequisite for claiming the Investment Tax Credit (ITC) under the Inflation Reduction Act.
The distinction between compliant and non-compliant products is not always obvious. A battery assembled in the United States can still fail FEOC requirements if its cells, cathode materials, or critical minerals originate from PFE-controlled supply chains.
Under the Material Assistance Cost Ratio (MACR) framework, battery cells represent approximately 52% of total BESS equipment cost per the Treasury’s safe harbor tables. This means cell sourcing alone can determine whether a project passes or fails the MACR threshold.
In 2026, the MACR threshold for energy storage is 55%. A project using PFE-manufactured cells will consume more than half its cost allocation on restricted components, almost certainly pushing the MACR below the threshold. As the threshold rises to 75% by 2030, the margin for any PFE-sourced components shrinks further.
FEOC compliance is evaluated at the component level, not just the final assembly location. Three factors determine whether a battery qualifies:
Manufacturing origin: Were the cells manufactured by a non-PFE entity? Assembly in the U.S. does not guarantee compliance if the manufacturer is PFE-controlled.
Corporate ownership: Does the manufacturer have ownership ties to a covered nation’s government? This includes subsidiaries, joint ventures, and entities subject to foreign government jurisdiction.
Upstream supply chain: Are critical minerals and cathode materials sourced from non-PFE suppliers? Licensing arrangements with specified foreign entities can also trigger PFE classification.
The landscape of FEOC-compliant battery suppliers is evolving rapidly. Several manufacturers have established or are building non-PFE supply chains for utility-scale BESS:
Samsung SDI announced in late 2025 that it is converting EV production lines at its Indiana facility to prismatic LFP cell production for grid storage. A $1.36 billion supply contract was confirmed, with additional contracts reported. This creates a major FEOC-compliant LFP cell source for U.S. developers.
Enphase Energy offers FEOC-compliant BESS products for distributed storage applications. The company has published a compliance verification tool and provides product-level FEOC status documentation. Enphase is actively transitioning its entire product line to FEOC-compliant sourcing.
Several other manufacturers are certifying non-PFE status and providing compliance documentation to customers and financing parties. Market conventions around certification and substantiation are standardizing as Treasury guidance matures.
Notably, major Chinese manufacturers including CATL, BYD, and Gotion are classified as PFEs. Projects using their products will not meet MACR requirements for ITC eligibility.
Treasury’s Certification Safe Harbor allows developers to rely on supplier attestations. Under this framework, suppliers certify under penalty of perjury that their products are not manufactured by PFEs and that they have no knowledge of upstream PFE involvement.
Developers should request formal FEOC compliance certifications from every battery supplier. Third-party legal and accounting advisors are increasingly being engaged to validate compliance documentation for financing and insurance purposes.
For a complete guide to FEOC compliance, MACR calculation methods, and the full OEM supplier landscape, see Carina Energy’s FEOC Compliance Guide for BESS at carina energy.
Carina Energy is a boutique owner’s representative firm specializing in BESS permitting and development. If you’re evaluating battery suppliers for FEOC compliance, visit our FEOC Compliance Guide at carina energy.
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