Bulk-Power System Executive Order: Understanding the Impacts

On August 26, 2026, President Trump signed Executive Order 14420, “Declaring a National Emergency to Secure the United States Bulk-Power System” (Order).

The Order establishes a broad prohibition-and-licensing framework for foreign-produced bulk-power system electric equipment—directly implicating utility-scale solar inverters, battery energy storage systems, and a wide range of transmission and generation infrastructure.

Key Takeaways

• The Order prohibits the acquisition, importation, transfer, or installation of foreign-produced bulk-power system electric equipment where a Covered Foreign Entity has an interest and the Secretary of Energy determines the transaction poses undue risk—but prohibitions attach only after a secretarial determination, so near-term exposure is primarily diligence, procurement, and contracting risk.

• The equipment list expressly captures utility-scale and grid-connected inverters, battery energy storage systems, and generation turbines—placing solar and storage developers squarely in scope alongside transmission owners.

• The Order reaches the installed base: the Secretary of Energy may impose conditions on continued use, maintenance, or updating of equipment acquired before the Order—including requirements to isolate, disconnect, replace, or remove such equipment—creating potential retrofit and stranded-asset risk.

• Prohibitions apply notwithstanding any pre-existing contract or permit, meaning existing supply agreements and equipment orders are not grandfathered.

• Implementing regulations are due within 120 days; Covered Foreign Entity designations, the pre-qualified vendor/equipment list, and licensing procedures are all pending—final market impact will depend on rulemaking outcomes.

Summary Impacts

The Order creates a framework invoking the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.), the National Emergencies Act (50 U.S.C. 1601 et seq.), and Section 301 of Title 3 of the United States Code (U.S.C.). The Order allows the Secretary of Energy (Secretary) to prohibit, condition, or license transactions involving foreign-produced bulk-power equipment tied to designated foreign entities. Its practical effect will depend on forthcoming regulations, but its broad scope and reach to existing equipment are already significant.

Prohibition Authority and Scope of Covered Equipment

Section 2(a) prohibits acquisition, importation, transfer, or installation of foreign-produced bulk-power system electric equipment when (i) a foreign country or national has an interest in the transaction, (ii) it was initiated after August 26, 2026, and (iii) the Secretary determines the equipment or associated components, software, firmware, digital or maintenance services, or remote-access capabilities were designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to a Covered Foreign Entity and pose an undue or otherwise unacceptable national-security risk. Covered equipment is broad, including (among other things, transformers, utility-scale and grid-connected inverters, battery energy storage systems, UPS systems, generation turbines, relaying, industrial and safety controls, and related software/firmware); agencies may also scrutinize lifecycle maintenance and supply-chain dependencies.

Retroactive Reach: Installed-Base Authority

Section 2(b) reaches equipment acquired or installed before the Order. The Secretary may condition its continued use, operation, maintenance, or updating, including by requiring identification, isolation, monitoring, securing, disconnection, replacement, or removal, subject to grid-reliability, replacement-availability, and essential-service considerations and phased timelines. This creates retrofit and stranded-asset risk.

Override of Pre-Existing Contracts and Permits

Section 2(d) applies the prohibitions notwithstanding pre-existing contracts, licenses, or permits, so existing supply and procurement arrangements are not grandfathered and may become prohibited or conditioned after a designation. Section 2(f) bars transactions that evade or attempt to violate a prohibition.

Pre-Qualified Vendor and Equipment List

Section 2(e) authorizes criteria and procedures for pre-qualifying equipment and vendors and publishing an exempt list. The list may guide procurement but does not limit later prohibitions or removals.

Rulemaking and Key Deadlines

Section 3(b) requires implementing rules within 120 days, including Covered Foreign Entity designations, equipment scrutiny, and licensing procedures. Section 4 separately requires recommended FAR revisions within 180 days, followed by a 90-day FAR Council consideration period; Section 3(c) calls for prompt recommendations on inventorying, isolating, monitoring, or replacing risky equipment.

Covered Foreign Entity Definition

 The “Covered Foreign Entity” definition includes a country subject to a U.S. arms embargo or ITAR sanctions (22 C.F.R. 126.1), and any person owned by, controlled by, or subject to that government’s jurisdiction or direction. It also covers countries or persons the Secretary, after consulting national-security officials, determines are detrimental to U.S. national security or foreign policy, allowing expansion through rulemaking.

Comparison to Executive Order 13920 (May 2020)

 Executive Order 13920 titled “Securing the United States Bulk-Power System” was signed on May 1, 2020 (EO 13920) and was revoked on April 20, 2021. While the Order revives and substantially expands that framework, here are the key differences:

• Compared with EO 13920’s focus on equipment used in bulk-power substations, control rooms, and generating stations, the Order reaches a broader range of equipment – specifically, utility-scale and grid-connected inverters, battery energy storage systems, UPS systems, generation turbines, industrial control systems, safety instrumented systems, and associated software and firmware.

• The Order replaces the “foreign adversary” terminology with the “Covered Foreign Entity” construct. 

• The Order adds express authority to impose conditions on pre-existing installed equipment, including isolation, disconnection, replacement, or removal, and expressly applies notwithstanding pre-existing contracts, licenses, and permits.

• The implementation period of the Order is shorter—120 days rather than 150—with recommended Federal Acquisition Regulation revisions due within 180 days and a subsequent 90-day Federal Acquisition Regulatory Council consideration period.

• Finally, the Order expressly addresses cybersecurity, digital services, and remote-access capabilities, authorizes the Secretary to establish pre-qualification criteria and procedures for vendors and equipment, and prohibits evasion, attempted violations, and conspiracies to violate its prohibitions.

Market Impacts and Next Steps

 The 120-day rulemaking window makes supply-chain mapping and alternative sourcing urgent. The post-effective-date prohibition, including for inverters and battery energy storage systems, puts solar and storage developers, as well as transmission owners, at near-term risk. Developers, owners, operators, EPC contractors, offtakers, and financing parties should review change-in-law, force-majeure, compliance, substitution, delay-damages, M&A adjustment, and vendor-inventory provisions across PPAs, EPCAs, O&M and supply agreements, and related financing arrangements.

 We will continue to monitor these developments and provide updates as they emerge. In the meantime, clients should (i) review any ongoing or previously executed agreements for potential impacts and amendments, and (ii) work with knowledgeable counsel to update forms of such agreements to incorporate protections against increased costs for developers and owners arising from this Order and future determinations.

Need specific guidance on how to protect
your supply chain, procurement strategies,
and financing arrangements?

Get in touch today:

Mary Smith, Attorney
Janny Gandhi, Attorney
Gary Stapleton, Partner
Karleen Stern, Partner