Notice 2026-15: New Material Assistance Guidance and Interim Safe Harbors
On February 12, 2026, the U.S. Treasury Department and IRS issued guidance further clarifying the application of the interim safe harbors for determining compliance with material assistance from a prohibited foreign entity (“PFE”) rules. The guidance does not address effective control and entity level PFE restrictions in any meaningful way and does not introduce new safe harbor tables for material assistance compliance.
Introduction
Notice 2026-15 (Linked here) provides interim guidance regarding safe harbors provided in the OBBB for compliance with material assistance rules for solar, wind and storage projects as well as manufacturers of eligible components. For a refresher on OBBB material assistance rules, see our discussions here (regarding the OBBB), and here (providing a short video summary) As a reminder, all solar and wind projects (“qualified facilities”) and BESS projects (“EST”) with a start of construction date after December 31, 2025 must comply with the material assistance from a PFE rules or that facility (or eligible component for 45X purposes) is disqualified from receiving any tax credits under Section 45Y, 48E or 45X of the Code, as applicable.
What’s not covered
Let’s start with what Notice 2026-15 does not address. Notice 2026-15 does not provide (1) new safe harbor tables, (2) further guidance regarding compliance with the complex “effective control” analysis for determining ”foreign-influenced entity” status, (3) further clarification on taxpayer-level analysis of PFE status, and (4) rules geared toward preventing the evasion, circumvention or abuse of the application of restrictions around PFEs. In particular, Notice 2026-15 leaves open pressing questions regarding debt and equity ownership that may trigger PFE status, as well as more granular rules regarding what contractual provisions will trigger effective control. However, the Notice does confirm that payments made to a specified foreign entity under any intellectual property license that is entered into or modified on or after July 4, 2025 will result in the specified foreign entity having effective control over the taxpayer's qualified facility or EST, causing the taxpayer to be considered a foreign-influenced entity.
What is covered
Notice 2026-15 does provide guidance for qualified facilities and ESTs seeking to comply with material assistance rules. The Notice provides similar guidance for eligible components for taxpayers seeking tax credits under Section 45X of the Code.
The key sections of Notice 2026-15 address the use of the direct cost method to determine compliance with material assistance from a PFE rules (Section 3), and provide a breakdown of key safe harbors available to a taxpayer in lieu of undertaking a direct cost methodology (Section 4).
Guidance for Direct Cost Methodology
A taxpayer may elect to use a direct cost methodology for determining material assistance from a PFE compliance where one of the enumerated safe harbors is unavailable or where direct costs and supply chain tracing are easily obtainable. Complying with the material assistance from a PFE rules is all about calculating a cost ratio and comparing the results to specific target percentages enumerated in the OBBB. See our infographic here that describes the OBBB requirements for the material assistance cost ratio.
Terms you need to know: Notice 2026-15 refers to the material assistance cost ratio required for a qualified facility or EST (for 45Y and 48E purposes) as the “Clean Electricity MACR”, and the cost ratio require for eligible components (for 45X purposes) as the “Eligible Component MACR”.
The key guidance clarified in Notice 2026-15 for purposes of the direct cost method for calculating a Clean Electricity MACR or an Eligible Component MACR includes:
When determining which direct costs go into both the numerator and denominator of your MACR calculation, a taxpayer must identify each Manufactured Product (“MP”) or Manufactured Product Component (“MPC”) that performs a unique, specified function within the qualified facility or EST. The Notice clarified the general market view that an MP or MPC is defined to mean the “manufactured products (including components)” definition leveraged in the existing domestic content rules, and the Notice further clarified that each MP and MPC should be evaluated at the same level and description of components as those sections in the safe harbor tables set forth in the 2023-2025 IRS domestic content notices.
When not using a safe harbor methodology, a taxpayer must track both the direct costs of the MPs and MPCs and whether each MP or MPC was mined, manufactured or produced by a PFE.
The Notice introduces de minimis tracking rules whereby a taxpayer may assign MPs or MPCs of the same type to qualified facilities or ESTs placed in services during the same taxable year without individually tracking each MP and MPCs; provided, the direct costs of all such MPs and MPCs is less than 10% of the total direct cost for such qualified facility or EST.
In addition to the de minimis tracking rules, Notice 2026-15 introduces rules for tracking MPs and MPCs in ESTs with capacity under 1MW, and are of the same type and placed in service in the same taxable year.
To track direct costs a taxpayer can use the Certification Safe Harbor (described below), or if the taxpayer choses not to or cannot use the Certification Safe Harbor (for example, the type of project is not listed in the 2023-2025 domestic content safe harbor tables) then the guidance notes that the taxpayer must apply the definition of a PFE to the entity that mined, produced or manufactured the relevant MP or MPC. That’s obviously difficult to do, and shows that, without leveraging one of the safe harbors noted below, the PFE and material assistance rules create a significant diligence and tracking burden, more than the domestic content rules and possibly the PWA rules (certainly when weighing the consequences of non-compliance).
For purposes of the 80/20 Rules, only the direct costs of new MPs and MPCs are used when calculating a Clean Electricity MACR.
Helpfully, steel or iron components that meet the definitions from the domestic content guidance are not included in the Clean Electricity MACR (unless identified as an MP or MPC in other guidance).
Notice 2026-15 distinguishes MACR calculations for a qualified facility or EST and qualified interconnection property.
Specifically, a taxpayer must separately calculate a MACR % for the qualified facility or EST and qualified interconnection property if that taxpayer seeks to include the qualified interconnection property as part of claiming 48E tax credits. However, if the taxpayer does not intend to include qualified interconnection property as part of seeking such tax credits, the taxpayer does not need to perform a separate MACR analysis.
Unfortunately, because the 2023-2025 domestic content safe harbor tables do not address interconnection property, we are left with a direct cost analysis and applying the definitions of MP, MPC and PFE when assessing a MACR for the interconnection property.
Eligible Component MACR.
Notice 2026-15 provides two alternatives for tracking constituent material (aside from applying the definition of constituent material): (1) the Identification Safe Harbor (discussed below) and (2) tracking Constituent Materials based on averages.
A taxpayer is permitted to track Constituent Materials of a particular type incorporated into the same eligible component and produced during a “specified period” (which generally means less than the taxable year of the taxpayer, subject to other limitations described in the Notice). Likewise, a taxpayer may average the costs of such constituent material incorporated in or consumed in the same type of eligible components during a specified period.
If a taxpayer does not use the Certification Safe Harbor for purposes of identifying whether a Constituent Material is PFE sourced, then the taxpayer must apply the definition of PFE to the direct supplier. The Notice clarifies that where a direct supplier is merely a reseller, the taxpayer must apply the definition of PFE to the entity that mined, produced or manufactured the particular constituent material.
Interim Safe Harbors
Section 4 of Notice 2026-15 provides further details on three major interim safe harbors: (1) the Identification Safe Harbor, (2) the Cost Percentage Safe Harbor, and (3) Certification Safe Harbor. Each of these safe harbors may be used for determining a Clean Electricity MACR or Eligible Component MACR.
Most developers, investors and suppliers will find Section 4 familiar with few or no real surprises in how the IRS expects taxpayers to apply each of these safe harbors.
Identification Safe Harbor
The Identification Safe Harbor is all about what is an MP or MPC for a qualified facility or EST (45Y and 48E) or what is a constituent material for eligible components (45X). So long as the qualified facility or EST is described in the 2023-2025 domestic content safe harbor tables, a taxpayer may use those tables for determining the universe of MPs (i.e., listed APCs on the domestic content tables) and MPCs (similarly named on the domestic content tables).
When using this method, the taxpayer must use the limited MPs and MPCs listed on the 2023-2015 domestic content safe harbor tables as the exclusive and exhaustive list. Any MPs or MPCs used in a project but not listed are disregarded. Further, all steel or iron products (as defined in the IRS domestic content guidance) is disregarded.
Note that this last rule means that when using the Cost Percentage Safe Harbor (described below) if a listed MP or MPC is not used in a project it is disregarded and so is the percentage listed in the 2023-2025 domestic content safe harbor tables. Practically, this rule means that when using the Cost Percentage Safe Harbor, a taxpayer could start out with a total MACR of less than 100%.
As noted earlier, the Identification Safe Harbor cannot be used when calculating a MACR for qualified interconnection property because no table in the 2023-2025 domestic content safe harbor tables lists such property.
The Identification Safe Harbor is similarly available for identifying constituent materials for 45X purposes with similar rules. Notice 2026-15 provides an exclusive list of listed eligible components, and provides special rules for battery modules.
Cost Percentage Safe Harbor
The Cost Percentage Safe Harbor allows a taxpayer to use the cost percentages listed in the 2023-2025 domestic content safe harbor tables when calculating a Clean Electricity MACR. To use the Cost Percentage Safe Harbor, the taxpayer must (1) use the Identification Safe Harbor, and (2) treat the assigned cost percentages listed in the 2023-2025 domestic content safe harbor tables as the exclusive and exhaustive set of costs.
The assigned costs percentages are used to calculate the total direct costs and the direct costs attributable to a PFE – so for both the numerator and denominator when calculating the MACR. Notice 2026-15 breaks down 5 steps to applying the Cost Percentage Safe Harbor (1) identify MPs and MPCs using the Identification Safe Harbor, (2) track only MPs and MPCs that are incorporated into the qualified facility, (3) determine a total direct cost percentage using the tables, (4) determine the total direct cost percentage attributable to a PFE, and (5) calculate your Clean Electricity MACR and compare that to the applicable threshold percentage.
Similar rules apply to 45X and identifying cost percentages for constituent materials, with a similar 5 step process described in the Notice.
Certification Safe Harbor
While the material assistance rules have added a great deal of complexity to supply chain considerations for suppliers and risk exposure for developers and investors, one component of the OBBB rules that provided some relief was the supplier certification and prescribed requirements (see here). Notice 2026-15 clarifies that a taxpayer may use a conforming supplier certificate to determine direct costs and direct costs attributable to a PFE, and to determine whether an MP, MPC or constituent materials are PFE produced or sourced, as applicable. Helpfully, Notice 2026-15 makes clear that the supplier providing the certificate may either certify (1) the total direct costs to the taxpayer or total direct material costs, as applicable, for an MP, MPC or constituent material, or (2) that such MP, MPC or constituent material was not PFE sources or was PFE sourced, as applicable. Much like the provisions of the OBBB, a taxpayer is entitled to rely on a compliant certification unless the taxpayer knowns or has reason to know that such certification is inaccurate.
Substantiation
The Notice provides that taxpayers will be required to notify the IRS in their tax returns if they are relying on the safe harbors and attach any supplier certifications. Taxpayers choosing to apply any of the safe harbors identified in the Notice must provide the IRS with a statement identifying the specific safe harbor, including the information used and application of the safe harbor to the taxpayer’s components.
Reliance
Effectively, Notice 2026-15 preserves the status quo established in the OBBB largely because no new tables were published in this Notice. Generally, taxpayers may rely on the guidance provided in Notice 2026-15 until on or before the date that is 60 days after the publication of forthcoming proposed regulations. Specifically, the various safe harbors in Section 4 may be relied upon until on or before the date that is 60 days after the publication of new safe harbor tables (and other guidance) required by the OBBB.
The substance of this much discussed guidance is consistent with what we thought was coming in early 2026. We should continue to expect additional guidance on effective control, PFEs and new safe harbor tables before the end of 2026. Please reach out to any of us here at Clean Energy Counsel for specific guidance and a more detailed assessment of how Notice 2026-15 applies to your projects, supply chain and pipeline.
Final Thoughts
While we continue to await further guidance on “effective control” and PFE taxpayer compliance, this Notice does provide a helpful roadmap regarding material assistance diligence and documentation for financing parties and industry participates. Expect to see a continued priority of safe harbored projects and certification requirements for the time being, with diligence-heavy workstreams to follow.