On August 26 the President declared a national emergency over foreign-produced electric grid equipment and gave the Department of Energy authority to block its purchase, and in some cases to order its removal from equipment already installed and operating.
The equipment list in the order names battery energy storage systems and grid-connected inverters explicitly, which raises a fair question for anyone who owns either: does this reach a commercial or municipal project?
For most distribution-connected systems, the answer on the face of the order is no. The reason turns on how two definitions fit together, and it is worth working through, because the genuine uncertainty sits somewhere other than where it first appears.
The order invokes the International Emergency Economic Powers Act, the National Emergencies Act, and section 301 of title 3. Notably, it does not invoke the Federal Power Act. This rides on emergency economic authority rather than on the government's electricity-specific powers, which is a meaningful choice and one that shapes how far it can reach.
The operative prohibition covers any acquisition, importation, transfer, or installation of foreign-produced bulk-power system electric equipment where the transaction was initiated after August 26, 2026, where the equipment was designed, developed, manufactured, or supplied by a person owned by, controlled by, or subject to the direction of a Covered Foreign Entity, and where the Secretary of Energy determines the transaction poses an undue risk of sabotage, unauthorized access, supply disruption, or catastrophic effects on critical infrastructure.
Two features of that provision are worth drawing out. The prohibition applies to transactions initiated after the date of the order, so it is prospective as to purchases. And it is not self-executing: it applies only where the Secretary has made a specific determination. Nothing is prohibited today by operation of the order alone.
The Department of Energy has 120 days to publish implementing rules, which puts that around late December 2026. It has 180 days to recommend revisions to the Federal Acquisition Regulation prioritizing US-manufactured energy infrastructure, after which the FAR Council has 90 days to consider proposing amendments.
The order contains two definitions that work together, and both are needed to place a given piece of equipment.
The first defines the bulk-power system as facilities and control systems necessary for operating an interconnected electric energy transmission network, plus the generation needed to maintain system reliability. It then says the definition includes transmission lines rated at 69,000 volts or more, and does not include facilities used in the local distribution of electric energy.
The second defines bulk-power system electric equipment, and the list is long. It names substation transformers, reactors, capacitors, large and small generators, protective relaying, high voltage circuit breakers, industrial control systems, distributed control systems, safety instrumented systems, and, relevant here, utility-scale and other grid-connected inverters, and battery energy storage systems.
The gating language is the opening of that second definition: items used in bulk-power system substations, control rooms, or power generating stations. Every item on the list is qualified by where it sits. And the closing sentence excludes items that have broader application beyond the bulk-power system unrelated to the national security concerns identified in the order.
Both halves carry weight. The equipment taxonomy is broad, and the definitional boundary excludes local distribution. Either definition read on its own gives an incomplete picture of what is covered.
For a concrete case: a 500 kW, 2 MWh battery installed at a water district and interconnected at 12 kV. On the face of the order that sits outside scope. A 12 kV interconnection is local distribution, expressly excluded, and the asset does not sit in a bulk-power system substation, control room, or generating station.
Three features of the text keep this from being a clean answer, and each is worth tracking.
None of that changes what the order says today. It does mean the practical reach will be settled by the Department of Energy's rulemaking, not by the text, and that rulemaking is due around the end of December.
Unlike the prohibition on new transactions, this part of the order applies to equipment that is already in service.
Once the Secretary has made the required determination, the order permits conditions on the continued use, operation, maintenance, servicing, or updating of foreign manufactured or operated bulk-power system electric equipment acquired or installed before the date of the order. The enumerated remedies are to identify, isolate, monitor, secure, disconnect, replace, or remove it.
Before ordering isolation, disconnection, replacement, or removal, the Secretary must consider effects on reliability and safety, the availability of secure replacements, and continuity of essential service, and may establish phased compliance. That is a real constraint and it will matter.
There is no grandfathering. The order states that its prohibitions apply notwithstanding any contract entered into or any license or permit granted before the date of the order.
The order does not enumerate countries. It incorporates them by reference: a Covered Foreign Entity is a country, or a person owned or controlled by or subject to the jurisdiction of a government of a country, that is subject to a United States arms embargo or sanctions regime under the International Traffic in Arms Regulations at 22 C.F.R. 126.1. The Secretary may also designate others.
The practical effect is close to the commonly assumed list, because ITAR 126.1 currently covers China, Russia, Iran, North Korea, Cuba, Venezuela, Syria, Belarus, Burma and others. But incorporating rather than enumerating means the covered set changes whenever the State Department amends that section, with no further executive action.
For anyone procuring solar or storage equipment, this is now the third distinct foreign-sourcing regime to track, and the three do not share a definition.
The order makes no reference to the tax rules, and the tax rules make no reference to anything like ITAR. A vendor can satisfy one test and fail another. Diligence that establishes material assistance compliance for tax purposes does not establish anything under this order, and the reverse is equally true.
For most commercial and municipal solar and storage projects, there is no immediate reason to change procurement. The useful preparation is being able to answer the question when the rules arrive.
Know who manufactures your inverters, your battery cells, and your battery management and control systems, and know the ownership above those manufacturers rather than just the brand on the enclosure. If you are already gathering that for the tax rules, you are most of the way there, though you are gathering it against a different test.
If any part of your project does sit at or above 69 kV, or interconnects into a transmission substation, treat it as in scope and plan accordingly.
And watch for the Department of Energy rulemaking around the end of December, particularly for how it treats grid-connected inverters and storage below transmission voltage. That is where the question this order leaves open will actually be answered.
