Treasury issues FEOC guidance for solar developers, manufacturers
The U.S. Department of the Treasury and the Internal Revenue Service issued the initial guidance implementing prohibited foreign entity (PFE) rules — aka the foreign entities of concern (FEOC) clause in the One Big Beautiful Bill Act (OBBBA).
The notice of guidance, issued Feb. 12, is aimed at determining whether electricity-producing qualified facilities, energy storage technologies or eligible components are receiving material assistance from a PFE and would be ineligible for certain energy tax credits.
Some corners of the solar industry are responding to the impacts of the ruling.
“Fluence welcomes the initial guidance from the U.S. Treasury, which provides needed certainty on several key issues related to the One Big Beautiful Bill Act (OBBBA) Prohibited Foreign Entity restrictions,” said Julian Nebreda, president and CEO of energy storage manufacturer Fluence. “While we are continuing to review the details, our initial analysis confirms our existing interpretation of the statute. We are confident that Fluence’s domestic content product and robust U.S. supply chain will continue to provide a clear and compelling path for our customers to achieve Investment Tax Credit compliance,”
Crux has compiled a comprehensive breakdown of the guidance here.
More from the Treasury, IRS
The OBBBA added new restrictions to renewable energy credits under Internal Revenue Code Sections 45Y and 48E, and the advanced manufacturing production credit under Section 45X to determine eligibility for credits when there is material assistance from a PFE.
Notice 2026-15 PDF provides that Treasury and IRS intend to propose regulations with respect to the definition of a PFE and the calculation of the material assistance cost ratio that taxpayers must use to determine whether there was material assistance from a PFE. The notice also details how to use interim safe harbors authorized by the OBBBA and provides example calculations under those safe harbors.
The notice also provides that Treasury and IRS intend to propose regulations and other further guidance with respect to the definition of a PFE and the material assistance rules, including new safe harbor tables as authorized in the OBBBA.
The notice explains that a taxpayer may rely on the rules provided in the notice to calculate the material assistance cost ratio for:
- Any Section 45Y or 48E qualified facility or energy storage technology the construction of which begins after Dec. 31, 2025, until 60 days after the publication of the forthcoming safe harbor tables.
- Any Section 45X eligible components sold in taxable years beginning after July 4, 2025, the date of the OBBB’s enactment, until the date that the forthcoming safe harbor tables are published.
Finally, the notice requests comments 45 days from the date of publication regarding definitional, anti-circumvention and other issues for future guidance.
For more information, visit OBBBA provisions on IRS.gov.
