On August 26, the US President signed an executive order, "Declaring a National Emergency to Secure the United States Bulk-Power System," declaring a national emergency on the grounds that foreign equipment may threaten the security of the US bulk-power system and authorizing the US Department of Energy to restrict the procurement, import, transfer, and installation of certain foreign-made power equipment in the United States.
The core of this round of policy lies in the fact that the US has, for the first time, systematically included ESS battery systems, grid-tie inverters, and related software, firmware, remote access, and operation and maintenance services into the national security review framework for the bulk-power system.
The executive order applies to the Bulk-Power System, covering transmission networks of 69 kV and above, excluding local distribution networks. Regulated equipment includes transformers, grid-tie inverters, ESS battery systems, high-voltage circuit breakers, relay protection, industrial control systems, as well as related software, firmware, digital services, remote access, maintenance, and upgrade services.
However, this policy does not currently equate to a "comprehensive US ban on Chinese energy storage equipment."
Although the executive order defines "foreign-produced" as equipment not manufactured, produced, or assembled in the United States, actual triggering of restrictions requires involvement of a Covered Foreign Entity and a determination by the Secretary of Energy that the relevant transaction poses sabotage, unauthorized access, malicious remote operation, supply disruption, or other unacceptable national security risks. Therefore, being foreign-made only means entering the scope of review, not an automatic prohibition.
At the same time, the executive order retains considerable enforcement flexibility. The DOE can prohibit relevant transactions, or allow some to proceed through licenses, supplier pre-certification, and risk mitigation measures. For existing equipment, while the DOE can require monitoring, isolation, disconnection, replacement, or even removal, it must also consider grid reliability, alternative equipment supply, and continuity of power supply.
This means the current round of policy is closer to first establishing a high-intensity regulatory framework, and then determining the actual enforcement boundaries based on risk, industry conditions, and subsequent maneuvering. Its significance lies not only in restricting foreign equipment, but also potentially serving as a policy bargaining chip in subsequent economic and trade negotiations. By first raising the policy ceiling and expanding administrative discretion, and then adjusting enforcement intensity based on subsequent negotiations and industry conditions, it exhibits strong overtones of pressure and bargaining.
What will truly determine the industry impact are the implementation rules to be issued by the US DOE within the next 120 days. Subsequent focus should be on how Covered Foreign Entities are identified, which equipment and enterprises are classified as high-risk targets, how supplier pre-certification is implemented, and whether measures such as local manufacturing, software isolation, and remote access restrictions can serve as compliance or exemption conditions.
In the short term, the direct impact of this executive order on Chinese energy storage enterprises' shipments is expected to be limited. There is currently no complete ban list covering Chinese energy storage enterprises, nor an explicit requirement for all Chinese battery cells, BESS, or PCS to immediately withdraw from the US market.
More importantly, the US domestic energy storage industry chain is currently not enough to fully replace imports. US energy storage demand continues to grow, while domestic capacity construction for battery cells, materials, PCS, and certain key equipment requires time. If the Chinese supply chain were fully excluded in the short term, it would not only drive up system costs but could also cause project delays, affecting grid expansion, new energy grid connection, and supporting loads for new data centers.
Therefore, even if this round of policy tightens further, it will be difficult to fully enforce it to the strictest extent. A more likely path is to prioritize restrictions on high-risk equipment directly related to grid control authority and cybersecurity, while gradually reducing reliance on the Chinese supply chain through transition periods, licenses, localization retrofits, and tiered supplier management.
Among these, PCS, EMS, SCADA, BMS communication modules, and cloud platforms may face higher policy risks than bare battery cells. The executive order focuses on unauthorized access, malicious remote action, software, firmware, and remote-access capability, indicating that the focus of US regulation has extended from the origin of equipment to software sources, data security, and remote control rights.
By contrast, bare battery cells themselves do not directly undertake grid-connection control functions, and pressure on them stems more from tariffs, PFEs, and supply chain localization requirements. Thus, the future US energy storage market may see a more distinctly tiered regulatory approach: stricter restrictions on control layers, communication layers, and critical infrastructure equipment, while hardware segments like battery cells are phased out more through tariffs, tax credits, and localization requirements.
There is a precedent for this policy path. In 2020, the US established a similar bulk-power system security framework through Executive Order 13920, "Securing the United States Bulk-Power System," but the subsequent Prohibition Order that actually took effect mainly focused on specific utilities and related equipment supplying Critical Defense Facilities, and was not fully enforced to the maximum extent of the executive order.
Therefore, what is more notable about this executive order is not "whether Chinese energy storage equipment will be banned immediately," but that the US has formally established a national security regulatory framework covering BESS, PCS, software, remote access, and operation and maintenance systems.
In the short term, the policy will more likely affect market expectations, project procurement, and compliance reviews; in the medium and long term, it may drive US utility-scale energy storage projects to further raise localization requirements for hardware, software, data, and control rights. Constrained by insufficient capacity in the US domestic energy storage industry chain, the feasibility of fully excluding the Chinese supply chain remains relatively low, and the ultimate impact still depends on the detailed implementation rules in the next 120 days.
SMM New Energy Research
Wang Cong 021-51666838
Ma Rui 021-51595780
Feng Disheng 021-51666714
Lyu Yanlin 021-20707875
Zhang Haohan 021-51666752
Wang Zihan 021-51666914
Wang Jie 021-51595902
Xu Yang 021-51666760
Chen Bolin 021-51666836
Yang Le 021-51595898
Li Yisha 021-51666730
Huang Chencong 021-51595860
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