Solmar Insights
The Federal Communications Commission has expanded its ban on foreign-manufactured inverters, now explicitly including equipment connected via Ethernet and other wired forms of remote communication. These updated national security rules intersect with eligibility standards under the Inflation Reduction Act’s Section 45X, sharply affecting supply chain strategies for solar and grid developers targeting the US market.
Key figures
FCC expands foreign inverter ban to cover all grid-interactive models with Ethernet or wireless communications
Section 45X domestic manufacturing eligibility now provides a compliance pathway
Covered List now excludes pure AC-to-DC rectifiers and off-grid inverters
Expanded scope of FCC coverage
The FCC’s revised guidance marks a significant broadening of its national security “Covered List” for power and grid equipment. Responding to requests by the Department of Defense, the FCC now treats any inverter capable of Ethernet, Wi-Fi, cellular, or Bluetooth communication as in-scope, regardless of whether remote communication is actually present or simply enabled by design. This policy shift closes previous loopholes that let certain types of wired or hard-connected inverters bypass procurement scrutiny on federal or regulated utility projects.
The prior iteration of the ban focused primarily on wireless connectivity, such as inverters equipped with Wi-Fi or cellular modems. By including all forms of grid-interactive hardware capable of remote communications, including those using physical Ethernet ports, the FCC is seeking to eliminate what it defines as a core cyber risk to critical infrastructure. Sector participants will now need to verify compliance beyond simply disabling wireless radios.
Section 45X compliance pathway
A notable development in the latest guidance is the formalization of a compliance pathway via Section 45X of the Inflation Reduction Act’s advanced manufacturing tax credits. The FCC clarified that inverters manufactured by entities eligible for Section 45X support will not be considered foreign under the ban, regardless of company ownership or brand origin. This diverges from more restrictive Build America, Buy America Act (BABA) requirements, where domestic cost content will rise from 65% to 75% in 2029, by allowing for location and process-based eligibility tied directly to US advanced manufacturing incentives.
However, legal experts at Norton Rose Fulbright caution that while 45X eligibility eases some restrictions, companies designated as Foreign Entities of Concern (FEOC), including those majority-owned by Chinese investors, remain blocked from both Section 45X claims and from in-scope inverter projects. Thus, compliance will be determined not by brand identity but by the profile of the actual manufacturing entity and its ownership structure.
Exclusions and clarifications
Beyond the expansion to wired communication, the FCC has redefined its Covered List to remove specific device types. Pure AC-to-DC rectifiers and off-grid inverters are now formally excluded from the ban. This distinction clarifies that only grid-interactive devices with communication capability are subject to new restrictions, thereby minimizing inadvertent regulatory entanglements for behind-the-meter or remote power system use cases.
For equipment already fielded or with prior FCC authorization, the agency will permit the continued provision of software and firmware security patches, maintaining operational resilience for legacy sites. The rules also grant a narrow allowance for the importation of non-compliant inverters for laboratory testing and research and development, though commercial deployments remain restricted under the new policy regime.
Implications for developers and supply chains
The revised FCC rules have immediate and far-reaching supply chain consequences for US grid project developers and institutional buyers. With inverters now flagged based on their communication interfaces and the location of their manufacturing entity, as opposed to surface-level brand association, procurement teams must update technical specifications and compliance checklists for all new builds and replacements.
Section 45X offers a potentially more accessible route for qualifying inverters, but FEOC-based restrictions exclude many major Asian manufacturers. Developers will need to work closely with supply chain partners to identify eligible OEMs and track entity status changes as tax and regulatory definitions update alongside global investment flows. The carve-out for routine software patches on legacy equipment will be welcome news for asset managers with large, established fleets, but does not ease prospective projects’ compliance burdens.
How compliance is likely to unfold
Over the next several years, the evolving eligibility landscape under 45X and associated FEOC rules will demand enhanced cross-functional diligence from legal, engineering, and procurement leads. Unlike the BABA content thresholds, which phase in more stringent requirements over time, the 45X compliance route is available immediately where manufacturers qualify, presenting both risks and opportunities for rapid project deployment amid shifting partner eligibility.
Project finance, off-take agreements, and equipment warranties will now need to incorporate detailed origin and ownership diligence as standard, with supply agreements conditioned on ongoing compliance with FCC determinations. The limited opening for lab testing and R&D imports, though narrow, may help US manufacturers accelerate the validation and certification of qualifying inverter models, further differentiating the domestic production ecosystem from foreign-owned competitors.
What this means for buyers
The equipment supply chain for grid-interactive inverters and projects across the United States is directly affected by these changes. The FCC’s expanded ban now covers all grid-interactive inverter models with Ethernet or wireless connectivity, and clarifies how Section 45X eligibility creates an alternative route for domestic manufacturing compliance. Buyers must now ensure that new inverter procurement aligns with the revised foreign entity and manufacturing pathway rules, adjusting RFPs and due diligence this quarter to avoid project delays or non-compliance risk.
Reporting via the original publisher
