US BESS ban threatens supply chain and projects

Estimated reading time: 6 minutes · Last updated: 17 September 2026

The US executive order signed on 26 August 2026 bars imports of inverters, transformers and battery energy storage systems (BESS) when those devices are tied into transmission networks operating at or above 69 kV. The measure targets equipment that originates in, or is controlled by, 24 countries under US arms embargoes or sanctions, and names China as the most significant supplier. The order will apply to transactions “initiated” after 26 August 2026, and the Department of Energy has 120 days to issue implementing regulations. Its scope excludes distributed energy resources (DERS) and local distribution infrastructure, but the policy leaves widespread legal and procurement questions unresolved for grid-scale projects and operators.

The simplest solution is the one the executive order advocates: a blanket ban on equipment or components tied to any foreign adversary. This option sounds appealing until one considers the consequences.

Eric Hobby, CEO of Primary Transformers

What the order covers and how it would take effect

The executive order issued on 26 August 2026 designates a specific class of power-system equipment for import restrictions: grid-connected inverters, transformers and utility-scale battery storage arrays that are tied to transmission lines of 69kV or higher. Equipment used at the distribution level and distributed energy resources are explicitly outside the new restrictions, which means rooftop solar and most local distribution equipment are not swept up. The order does not immediately block every transaction; it applies to transactions “initiated” after 26 August 2026 and makes implementation conditional on the Department of Energy’s assessment that particular equipment presents an unacceptable risk to national security grounded in cybersecurity, sabotage or remote access threats.

Because implementation hinges on DOE rulemaking, the ban’s operational detail is still pending. Industry legal advisers have proposed paths the DOE might choose: a whitelist of pre-approved products, a licensing route for operators seeking to retain particular equipment, or stronger enforcement such as isolation, monitoring or removal of already-installed gear. The Federal Communications Commission’s 28 July restriction on new “connected power inverters” already introduced regulatory friction earlier in the summer, so operators are facing layered compliance questions even before DOE issues its regulations.

Immediate market responses and who is exposed

Markets reacted quickly after the order, with analysts and investors watching the shares of listed BESS suppliers. Two names in focus were Fluence and Tesla: Fluence briefly rose then declined, and commentators questioned whether the company can keep margins while delivering on a large backlog. The Battery StorageTech Bankability Ratings Report, cited alongside market commentary, records Fluence with a US$5.6 billion backlog, a fact that underpins concerns about execution risk if supply routes tighten.

At the supplier level, PV Tech Research’s Battery StorageTech report highlights concentration: the top five Chinese manufacturers hold 39% of global market share. Companies named in that ranking include CATL, Rept Battero, CALB and Eve Energy, and CATL has been upgraded to an AAA bankability rating in that dataset. Those manufacturers combine cell production and system assembly, giving them a cost and scale advantage that would be harder for non-integrated suppliers to match if access to Chinese-made cells and systems is limited.

Supply-chain vulnerabilities that the order exposes

Several practitioners and researchers have warned that removing a major source overnight creates new risks. Eric Hobby, CEO of Primary Transformers, argued that a blanket rule would have immediate knock-on effects for critical transformer components. He pointed out that “the only new high-voltage bushings available before late summer 2028 are made in China,” and warned that cutting that supply would halt purchases of 345kV+ transformers in the US for years. That example shows how a security-driven import restriction can translate into prolonged procurement bottlenecks.

Beyond transformers, China’s recent investment surge matters: in the first half of 2026, announcements outlined more than 120 billion yuan of planned new battery manufacturing capacity in China, a scale that underpins both cell supply and downstream system production. This announced capacity strengthens domestic cell availability and system assembly. If the United States separates itself from that manufacturing base, storage costs in the US could rise and deployments could slow at a time when grid-scale batteries are being used to firm variable renewables and improve resilience.

Policy uncertainty and the likely practical consequences for deployment

Implementation choices will determine whether the order becomes a chokepoint or a managed transition. Norton Rose Fulbright has suggested the DOE might try to permit continued operation through a whitelist or licensing scheme, which would reduce immediate disruption for utilities that rely on foreign-made gear. By contrast, a strict enforcement posture that requires removal or isolation would force project owners to re-source equipment, renegotiate contracts and possibly pause commissioning activity until replacements are available.

Policy uncertainty is already affecting procurement decisions. Some firms are reassessing contractor and supplier chains; others are pricing additional compliance risk into bids. Meanwhile, commentators such as Nicholas Weaver at the International Computer Science Institute argue the bans could undermine broader energy-security goals by slowing deployment of solar, wind and batteries at a time when reduced oil dependence is a strategic objective. The DOE’s timetable matters here: the department has 120 days to issue implementing regulations, and that window will shape whether projects proceed, pause or incur extra cost.

Two plausible paths: managed transition or extended disruption

The bottom line

The executive order of 26 August 2026 tightens control over imports of grid-scale inverters, transformers and BESS tied to lines of 69kV or higher and creates a narrow but material policy shock. The Department of Energy’s 120-day rulemaking window is the immediate hinge: a narrowly tailored licensing approach would limit disruption, while strict enforcement that lacks near-term domestic replacements risks pausing projects and raising costs. Given the concentration of cell and system manufacturing in China and the 39% share held by the largest Chinese suppliers, the practical outcome will depend on how the DOE balances security with grid reliability and whether US manufacturing can scale to fill urgent gaps.

What to watch

• Watch for Battery Asset Management UK & Ireland on 13 October 2026 for industry sessions addressing bankability and supplier selection.
• Watch for PV ModuleTech Europe on 3 November 2026, which will discuss supplier selection and system reliability for utility-scale PV and storage.
• Watch for the DOE implementing regulations; the department has 120 days to issue them and those rules will set the practical scope of the order.