Key Takeaways
- Executive Order 14420 prohibits certain transactions involving foreign-produced bulk-power equipment linked to Covered Foreign Entities and authorizes DOE to impose conditions on equipment installed before the order’s effective date.
- The order expressly covers grid-connected inverters, battery storage systems, certain uninterruptible power supply (UPS) systems and associated software — areas of particular importance for renewable energy, storage and data center projects.
- DOE has until Dec. 24, 2026, to publish implementing rules that will clarify which countries, companies and equipment are covered.
- Companies should assess the country of manufacture and ownership of major equipment suppliers and key components before initiating transactions or making procurement decisions.
On Aug. 26, 2026, President Donald Trump issued Executive Order 14420 declaring a national emergency related to foreign-produced equipment used in the U.S. bulk-power system. The order prohibits transactions “initiated after the date of this order” involving certain foreign-produced bulk-power system equipment that is connected to a Covered Foreign Entity and that poses a specified national security risk. Such determinations may be made by the U.S. Department of Energy (DOE) in coordination with other federal agencies. Upon making those determinations, the order also authorizes DOE to impose conditions on certain equipment acquired or installed before Aug. 26, 2026, including potential isolation, monitoring, disconnection, replacement or removal.
The order applies across the energy sector, including traditional and renewable generation, utilities, transmission developers, battery storage projects and certain data center infrastructure. Much of its practical impact will depend on DOE implementation, including which countries, companies, equipment and transactions DOE determines present an unacceptable national security risk.
This Is Not the First Bulk-Power Executive Order
The new order builds directly on Executive Order 13920, issued on May 1, 2020, during the first Trump administration. That order also declared a national emergency and authorized DOE to prohibit the acquisition, importation, transfer or installation of bulk-power equipment connected to foreign adversaries when the equipment posed specified national security risks. The 2026 order retains much of that original structure and terminology. A comparison of the two orders shows that substantial portions of the operative prohibition carried forward from the 2020 framework.
The Biden administration suspended EO 13920 for 90 days in January 2021, and DOE subsequently revoked the December 2020 prohibition order that implemented it for certain equipment serving critical defense facilities.
Key Points and Differences Between 2020 and 2026 Orders
New transactions. Similar to the 2020 order, the 2026 order applies to transactions “initiated” after the Aug. 26, 2026, order. A transaction is prohibited where DOE determines that the equipment or associated components, software or services are connected to a Covered Foreign Entity and that the transaction poses one of the risks specified in the order. The challenge will be that entities will not necessarily know what equipment is included in the prohibition until DOE acts; yet the prohibition applies with the signing of the 2026 order. Furthermore, pre-existing contracts, licenses and permits do not necessarily provide protection. The prohibitions apply “notwithstanding any contract entered into or any license or permit granted prior to the date of this order.” The order does not define when a transaction is “initiated,” leaving uncertainty as to how it applies to purchase orders, deliveries or change orders under master supply agreements executed before Aug. 26, 2026.
Existing equipment. The 2020 order primarily addressed transactions initiated after its issuance. The new order expressly authorizes DOE to impose conditions on the continued use, operation, maintenance, servicing or updating of foreign-manufactured or operated equipment acquired or installed before Aug. 26, 2026. DOE may require equipment to be identified, isolated, monitored, secured, disconnected, replaced or removed, although it must consider reliability, safety, replacement availability and continuity of service before requiring the more significant measures.
Broader technology coverage. The 2026 order expressly adds or highlights grid-connected inverters, battery energy storage systems, certain uninterruptible power supply systems, small generators, and associated software, firmware, digital services, maintenance services and remote-access capabilities. It also permits agencies to consider lifecycle maintenance, software updates and other supply-chain dependencies when determining whether equipment presents a risk. These additions are particularly important for renewable generation, storage and digitally controlled power infrastructure.
Revised foreign-entity standard. The 2020 order focused on equipment associated with a “foreign adversary.” The new order instead uses the term “Covered Foreign Entity,” which includes countries and persons connected to governments subject to specified U.S. arms embargoes or sanctions, as well as entities DOE determines are engaged in conduct detrimental to U.S. national security or foreign policy. The change gives DOE considerable discretion in determining which countries, companies and supply chains may ultimately be affected.
Federal procurement. The prior order created an interagency task force to develop federal procurement recommendations. The new order instead directs DOE within 180 days to recommend changes to the Federal Acquisition Regulation that account for national security risk and prioritize U.S.-manufactured energy infrastructure. This replaces the broader task-force structure established in 2020.
Equipment Potentially Covered
The order applies to the bulk-power system, including facilities and control systems necessary for operating transmission network, transmission lines rated 69 kV or higher and generation needed to maintain electric-system reliability. Local electric distribution facilities are excluded.
Covered equipment can include:
- substation transformers and high-voltage circuit breakers;
- large, small and backup generators;
- generation turbines and reactors;
- utility-scale and other grid-connected inverters;
- battery energy storage systems;
- certain uninterruptible power supply systems;
- protective relays, metering and other substation equipment; and
- industrial control systems.
The order also expressly reaches critical components and associated software, firmware, digital services, maintenance services and remote-access capabilities.
“Foreign-produced” is defined broadly as equipment not manufactured, produced or assembled in the United States.
“Covered Foreign Entity” means a country or any person owned by, controlled by, or subject to the jurisdiction or direction of a government of a foreign country that is subject to a U.S. arms embargo or sanctions regime, under the International Traffic in Arms Regulations (22 C.F.R. 126.1), or that the Secretary of Energy, in consultation with the Secretary of War, the Director of National Intelligence and the Assistant to the President for National Security Affairs, determined is engaged in conduct that is detrimental to the national security or foreign policy of the United States. This directive likely includes: Afghanistan, Belarus, Central African Republic, China, Cuba, Cyprus, Democratic Republic of the Congo, Eritrea, Ethiopia, Haiti, Iran, Iraq, Lebanon, Libya, Myanmar (formerly Burma), Nicaragua, North Korea, Russia, Somalia, South Sudan, Sudan, Syria, Venezuela and Zimbabwe.
What This Means for Energy and Data Center Companies
Before entering into new covered transactions any entity planning to purchase and install bulk-power system equipment should identify the country of manufacture, supplier ownership and control, and the origin of critical components, software, firmware, maintenance services and remote-access capabilities. Foreign origin alone does not make a transaction prohibited, but these facts will be central to assessing exposure under the order.
Utilities and transmission owners should expect increased scrutiny of supply chains for transformers, switchgear, control systems and other high-voltage equipment. The significant new issue is that previously installed equipment may also be subject to DOE-directed mitigation.
Renewable energy and storage developers should pay particular attention to inverters, battery systems and associated software and remote-access services, all of which are expressly addressed in the new order.
Traditional generation developers and operators face similar issues for turbines, generators, reactors, backup generation and control systems. The order is not limited to renewable technologies.
Data center developers and operators are specifically referenced by the administration as part of the rapid growth in electricity demand that increases the importance of grid security. The order does not broadly regulate all electrical equipment inside a data center, and local distribution facilities are excluded. However, equipment associated with grid interconnection, generation, storage and certain UPS systems supporting critical infrastructure may fall within its scope to the extent that equipment is part of or used in the bulk-power system as defined by the order.
What Happens Next
DOE has 120 days, until Dec. 24, 2026, to publish implementing rules or regulations as needed. Those actions could identify covered countries and companies, equipment warranting heightened scrutiny, licensing procedures, and potential mitigation requirements.
For companies with projects under development or significant existing generation or transmission assets, the immediate priority should be understanding the country of manufacture and ownership of major equipment suppliers and key components, as well as software, firmware, maintenance arrangements and remote-access services.
The principal uncertainty today is what equipment or foreign components will not be included in the prohibited transactions as later determined by DOE. Companies should therefore carefully scrutinize the origin of equipment, their components and software before initiating a transaction. Companies should also monitor DOE implementation closely and incorporate new requirements into procurement and conduct additional due diligence before making major procurement, vendor or equipment-replacement decisions.
The lawyers and professionals at McGuireWoods and McGuireWoods Consulting are monitoring these developments and related agency implementation. For questions or more information, please reach out to one of the authors or a member of McGuireWoods’ Energy Infrastructure Practice Group.