A new question in every deal
Since the 2025 law added prohibited foreign entity rules to the clean energy tax credits, almost every battery storage deal and battery factory has a new question attached: who really owns and controls the suppliers? The stakes show up in pricing. One industry report found that in the first half of 2026, exposure to these rules became the strongest predictor of the price a tax credit deal fetched.
Who does what today
- Suppliers provide written statements about where their products and inputs came from.
- Accounting firms usually test the material assistance cost ratio: how much of a product's or project's cost came from prohibited foreign entities.
- Counsel is usually left to judge ownership and effective control: whether a supplier is, or is tied to, a prohibited foreign entity.
- Tax equity investors, lenders and insurers want comfort before they commit. Insurance for prohibited foreign entity risk is often limited or excluded unless strong adviser opinions back the deal.
Where the gap is
The cost ratio is only as good as the list of suppliers it treats as prohibited foreign entities. Deciding who belongs on that list is the hard part:
- Ownership is layered. The links that matter can sit several levels up, held through funds, holding companies or government-linked investors.
- Control isn't only ownership. Board seats, officer appointments, debt and licensing deals can all give control without a majority stake.
- The rules are still being written. Treasury's first guidance came out in February 2026, safe harbor cost tables are due by the end of the year, and effective control is the least settled area.
- Everyone repeats the same work. Different buyers check the same suppliers separately, each starting from scratch.
Red flags hiding in public records
Some warning signs show up in plain sight: ownership disclosures in company filings, financing from state-linked lenders or funds, technology licensing from a covered-nation company, and cost figures that don't line up with what a supplier has said elsewhere. Information like this can create a reason to know, and an expectation that a buyer looks further before relying on a supplier's statement.
What good diligence looks like
- Ownership traced to the top, with every step tied to a public source.
- Control rights checked, not just share percentages.
- A dated evidence file that shows what was checked and what was found.
- Findings labeled by how strong the evidence is, so advisers know where to focus.
That's what Battery Pulse delivers: evidence and findings on who owns and controls battery suppliers, ready for your counsel and tax advisers to use.
See a sample report
General information, not legal or tax advice.