Navigating FEOC Restrictions — How To Confidently Safe Harbor This Year
The U.S. is entering a new era of clean-energy manufacturing requirements — and with it, more pressure on developers to verify where their equipment comes from and the ownership percentages of the manufacturers. Under federal law, a Foreign Entity of Concern (FEOC) includes companies owned or controlled by countries such as China, Russia, Iran, and North Korea.
Starting in 2024, FEOC rules began applying to electric-vehicle tax credits. With Trump’s One Big Beautiful Bill (“OBBB”), these restrictions will extend to battery energy storage systems (BESS) and other renewable energy technologies, tying project eligibility to domestic content percentages and limiting how much material can originate from FEOC-linked suppliers.
Why does this matter? Projects that use FEOC-sourced battery cells, modules, or critical minerals risk losing access to the 30% Investment Tax Credit (ITC). Without ITC, many projects become financially unattractive.
This challenge is magnified by the global supply reality: much of today’s lithium-ion battery supply chain still runs through China.
Safe Harbor: The Path to Preserve Today’s ITC Framework
Despite all of the evolving rules, developers still have a window to secure the current incentives: Safe Harboring in 2025.
Safe Harbor is an IRS mechanism that allows a project to “begin construction” before new regulations take effect — locking in today’s ITC rates.
A project can Safe Harbor by:
For projects under 1.5MW: Spending at least 5% of total project costs (typically via batteries, inverters, or long-lead equipment), and taking title or paying in full by December 31, 2025
or
Starting significant physical work at the project site and maintaining continuous construction.
If these thresholds are met — and equipment is delivered within roughly 105 days (3.5 months) — the project is treated as having begun construction, preserving its incentive eligibility even after FEOC sourcing bans take effect.
Key takeaway: Title transfer by December 31, 2025 is not optional — it’s a core Safe Harbor requirement and determines whether your project can lock in today’s ITC and depreciation benefits.
Safe Harbor buys developers time — time to finalize engineering, permitting, interconnection, and financing without losing access to hard-won incentives. But the window is short, and supply chains are tightening.
The Developer & EPC Dilemma
Even with Safe Harbor, developers face new complexity across the entire project lifecycle. The biggest challenges include:
Supply chain visibility: Many suppliers cannot easily prove their upstream sourcing content. Developers are left with uncertainty about whether their equipment will pass FEOC compliance tests.
Cost pressures: Shifting to non-FEOC sources often means higher upfront costs, as U.S. and allied manufacturing ramps up capacity but has not yet achieved the scale, innovation, and affordability of Chinese competitors.
Financing hurdles: Investors and lenders are demanding more proof of compliance before committing capital, creating bottlenecks in closing deals.
Timeline risks: Procurement delays from vetting, shipping, or re-sourcing can push projects past critical deadlines — or into markets with less favorable tariffs or interconnection rules.
The result? Projects that once felt straightforward now demand strategic procurement, documentation rigor, and early action.
Turning Policy Pressure into Project Power: The GridVest Approach
At GridVest, we see FEOC rules not just as a barrier, but as a catalyst to build a more resilient, transparent, and future-ready energy ecosystem. Developers partner with us because we provide end-to-end support across the areas that now matter most:
1. Supply Chain Clarity
We maintain direct relationships with vetted, scaling manufacturers across the U.S., China, Mexico, and other allied regions. We verify compliance down to the cell, module, and mineral level — removing guesswork and reducing risk.
2. Flexible Financing Solutions
Compliance often carries premiums. We structure extended terms, tailored financing, and credit solutions that keep projects viable while aligning with FEOC and Safe Harbor requirements. Plus GridVest can help insure title transfer by the December 31, 2025 deadline.
3. Aggregated Buying Power
By consolidating developer demand, we negotiate better pricing from multiple FEOC-compliant suppliers — lowering cost barriers and accelerating adoption.
4. Strategic Logistics & Warehousing
We coordinate warehousing, shipping, title-transfer timing, and delivery schedules to ensure equipment arrives within Safe Harbor windows — even amid global supply constraints.
With the January 1, 2026 FEOC deadline approaching, and title-transfer requirements tightening Safe Harbor criteria, developers cannot afford delays.
Looking Ahead: Navigate FEOC Compliance With Confidence
FEOC restrictions are only the beginning. Treasury and DOE will continue refining guidance in 2025, adding scrutiny to domestic content, sourcing documentation, and supply-chain verification.
But there’s also opportunity. Moving early secures scarce non-FEOC supply, builds trust with financiers, and positions developers as leaders in an increasingly competitive market. And while the ITC is the headline incentive, accelerated depreciation (MACRS + potential bonus depreciation) remains a key driver of continued tax savings.
GridVest currently partners with a number of FEOC-compliant battery manufacturers — and that network continues to grow.
Ultimately, resilience in energy comes from having the right partners. GridVest helps developers move quickly, stay compliant, secure incentives, and bring projects online in a changing landscape.
FEOC is a test. With the right strategy and support, it’s one the industry can pass.
Want to learn more about Safe Harboring in 2025?
See our recorded webinar, Navigating Battery Storage Procurement: How to Safe Harbor Batteries in 2025 Before It’s Too Late, to hear directly from GridVest experts on what these current standards are, what we are hearing from the field and legal advisors, and how to overcome some of these hurdles as we close out 2025.
If you’re preparing a renewable energy project and want confidence that it will qualify for incentives and meet Safe Harbor deadlines, we’d love to talk. Together, we can build a cleaner, more resilient energy future — one project at a time.
