On August 26, 2026, President Trump signed Executive Order 14421[1] (the “EO”), declaring a national emergency under the International Emergency Economic Powers Act (“IEEPA”) and National Emergencies Act (“NEA”) to address foreign-produced equipment used in the U.S. bulk-power system. Along with an accompanying fact sheet, and following other recent orders regarding cybersecurity and grid security, the EO revives and significantly broadens the architecture of President Trump’s 2020 bulk-power system order, covering transformers and transmission equipment but also inverters, battery energy storage systems (“BESS”), generators, industrial control systems, software, firmware, and remote access capabilities. The DOE’s implementing regulations under the EO, to be issued within 120 days, could have profound consequences for a broad spectrum of participants across the power sector.
On September 9, 2026, DOE’s Office of Cybersecurity, Energy Security, and Emergency Response published a Request for Information (“RFI”) seeking public input from a wide range of stakeholders, including utilities, manufacturers, software providers, EPC firms, investors and insurers, among others, to inform those implementing regulations. Comments are due within 30 days of the RFI’s publication. A public webinar is scheduled for September 16, 2026. While the RFI does not resolve any of the issues raised by the EO, DOE’s questions offer an early window into how DOE may do so.
The Order’s Basic Framework
The EO declares a national emergency, finding that foreign-produced bulk-power equipment presents an “unusual and extraordinary threat” to national security, foreign policy, and the economy, driven by growth in artificial intelligence, data centers, advanced manufacturing, and defense production. However, the order is not an immediate blanket ban on foreign electrical equipment. Rather, the EO prohibits any transaction, (1) involving property in which any foreign country or national has an interest, (2) initiated after (and, as described below, retroactive to) August 26, 2026, and (3) where DOE has determined that: (i) the bulk-power system electric equipment (or any associated critical component, software, firmware, or remote-access capability), is tied to a Covered Foreign Entity[2]; and (ii) the transaction poses an undue risk of sabotage, unauthorized access, or supply disruption affecting the bulk-power system; poses an undue risk of catastrophic effects on critical infrastructure or the economy; or otherwise poses an unacceptable risk to the national security.
The EO requires the DOE (in consultation with other senior executive branch officials) to publish implementing rules by December 24, 2026. Those rules are expected to clarify which countries, companies and equipment are covered. The RFI, the DOE’s first formal step toward that rulemaking, requests further input across eight major areas, including key definitions, pertinent risks and impacts, and process concerns.
The EO relies principally on IEEPA as a source of legal authority, but its approach draws more closely on the transaction blocking and import prohibition tools that IEEPA expressly authorizes than to the tariff power the Supreme Court rejected earlier this year in Learning Resources, Inc. v. Trump.[3] In the event of any legal challenge to the EO, we expect the key issues to turn on how DOE implements the order, including how broadly it defines Covered Foreign Entities and covered risk, and what process it affords affected vendors and purchasers.
Implications for the Power Sector
The potential consequences from the EO are broader than a prohibition on Chinese equipment. “Covered Foreign Entity” initially covers countries and persons under specified U.S. arms embargoes or sanctions, but DOE may designate additional countries or persons. The implementing rules will determine whether this remains a China-centric program or becomes a broader foreign supplier screening regime.
The EO’s prohibition applies to “transactions” that are “initiated” on or after August 26, 2026. The EO defines a transaction to include “any acquisition, importation, transfer, or installation of any foreign-produced bulk-power system electric equipment” but does not specify when a transaction is deemed to be initiated. It is unclear, for example, whether a transaction is initiated upon execution of a purchase order, upon shipment or delivery of equipment into the U.S., upon execution of the underlying agreement between a utility and a developer, or at some other point in the procurement or construction process.
Critically, this ambiguity also matters because the DOE’s authority under the EO could reach backward, for any transaction that is ultimately found to fall on or after the EO’s effective date, by requiring the identification, isolation, monitoring, or removal of equipment once it has been installed. Retroactive authority makes the order especially consequential, as owners of electric generation, transmission or distribution facilities could be required to implement costly mitigation measures or remove facilities from service. Without further clarity from the DOE, parties will not be certain whether a transaction in progress falls before or after the EO’s cutoff.
In order to mitigate their compliance risk, companies procuring transformers, BESS, inverters, turbines, control systems, and other covered equipment will need to conduct more thorough diligence on their equipment vendors, including with respect to upstream ownership, sourcing, firmware, software, cloud connectivity, maintenance providers and remote access architecture. The RFI signals that DOE is actively considering supply chain transparency measures such as software and hardware bills of materials, ownership tracing, and supplier audit rights.
The EO could have other effects upon certain segments of the power sector, both domestically and internationally:
Utilities and generators. Expect more detailed contractual representations in contracts for the procurement of equipment, cybersecurity requirements, and potentially, federal reporting or certification obligations. Existing equipment could become a larger issue if DOE requires mitigation or replacement of items installed after the date of the EO but prior to the issuance of its regulations thereunder.
Data Centers. Energy infrastructure serving data centers could be a special focus. According to Bloomberg, investment firm Kimmeridge Energy Management estimates that as many as half of the proposed U.S. data centers already are at risk of delay or cancellation “because of growing political backlash and the complexities of building physical assets.”[4] Additional complexities under the EO could exacerbate those risks.
Renewables and storage. Utility-scale solar and storage are particularly exposed given the EO’s focus on grid-connected inverters and BESS, sectors in which Chinese manufacturers have substantial global market share.
Conventional and nuclear generation. The order is technology-neutral, reaching turbines, generators, control systems, and even “reactors.” Gas, coal and nuclear operators therefore should not assume this is principally a renewable energy initiative.
Project financing. Financing documents may again allocate “foreign equipment” risk, as occurred after the 2020 order, when lenders and tax-equity investors reportedly required developers to fund equipment replacement costs and some construction lenders required cybersecurity audits. Similar concepts could reappear in loan documents, potentially more aggressively given the express authority conferred on DOE to act against installed equipment.
International reactions. Foreign financial markets are interpreting the EO as potentially advantageous to non-Chinese suppliers. The shares of South Korean equipment manufacturers rose on expectations of substitution for Chinese supply, while Chinese state-affiliated media criticized the measure as politically driven.
Potential Unintended Consequences
While the EO is designed to address cybersecurity concerns with certain foreign-manufactured equipment, implementation could aggravate reliability, increase equipment costs, strand assets, and delay projects needed to serve growing load. Restricting suppliers faster than domestic or allied production can replace them could lengthen project schedules and increase prices amid already constrained supply chains. In implementing the EO, the DOE will need to balance the competing values of grid security, reshoring, grid expansion and affordability.
Another risk is that DOE will attempt to promote system reliability by requiring replacement of certain equipment. Without an available secure substitute, such requirements could create operational risk, even though the EO requires DOE to consider reliability, safety, replacement availability and essential service continuity before ordering disconnection or removal.
The EO also could produce a de facto procurement mandate broader than its legal prohibition, as risk-averse utilities, lenders, and insurers may avoid any supplier that could conceivably become subject to the DOE’s rules rather than accept regulatory or stranded-asset risk. The private market may therefore create a much wider exclusion zone than DOE formally establishes, further constraining the development of needed electric generation and transmission resources.
A requirement to replace equipment also may raise ratemaking questions, as utilities seek to recover resulting costs from ratepayers. During implementation of the 2020 order, federal officials considered mechanisms to compensate utilities that were required to remove risky equipment, as state commissions asked whether federal taxpayers rather than individual utility customers should bear costs imposed to advance national security.
Request for Information
The RFI requests information across eight major areas by October 9, 2026:
- Scope, definitions, and covered transactions, including how to define “bulk-power system electric equipment” and which transaction types, equipment classes, or risk thresholds should be prioritized for implementation;
- Identification of Covered Foreign Entities and supply chain governance practices, such as security requirements, audit rights, and bills of materials;
- Methodologies for evaluating cybersecurity, national security, and supply chain risk, including what evidence should be considered;
- Inventories of existing equipment and potential mitigation measures (e.g., isolation, monitoring, replacement), in addition to the reliability and safety of mandated replacement or removal;
- Licensing processes, mitigation agreements, and vendor/equipment prequalification programs, including how the DOE should address urgent operational circumstances;
- Equipment categories heavily dependent on foreign suppliers, domestic manufacturing capacity, secure replacement options, and federal procurement policies;
- Economic, reliability, and safety impacts, particularly on small businesses; and
- Implementation, information sharing, and compliance considerations to provide practical information while protecting confidential business information.
Key Takeaways
EO 14421 is more than a prohibition on Chinese transformers or solar inverters. It establishes the architecture for a federal trusted supply chain for the bulk-power system, extending from physical equipment through software, firmware, servicing and remote access.
Given the current state of the industry, the DOE’s implementing rules will need to strengthen grid security without exacerbating equipment shortages or delaying the installation of needed capacity.
The regulatory battle now shifts to DOE’s 120-day implementation process, with priority issues including precise definitions of Covered Foreign Entities and covered equipment; recognition of allied and trusted supply chains; meaningful safe harbors and prequalification procedures; mitigation as an alternative to replacement; reliability-based transition periods; protection for equipment already ordered or under construction; and a workable mechanism for recovering federally compelled replacement costs. The RFI offers interested parties an opportunity to shape the resolution of these issues.
Companies with projects or operations that could be affected by the EO should feel free to reach out to discuss next steps, including whether to submit comments on the RFI before the comment period closes.
Questions? Please contact Jason Lewis, Scott Segal, Andrew Shaw, Laura Sheldon, Danielle Varnell and Kennedy Williams.
[1] A prior version of the EO incorrectly designated it as Executive Order 14420. That designation has now been corrected.
[2] As defined, a Covered Foreign Entity is 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 United States arms embargo or sanctions regime, under the International Traffic in Arms Regulations (22 C.F.R. 126.1), which currently includes Afghanistan, Belarus, Central African Republic, China, Cuba, Cyprus (through September 30, 2026), Democratic Republic of the Congo, Eritrea, Ethiopia, Haiti, Iran, Iraq, Lebanon, Libya, Myanmar, Nicaragua, North Korea, Russia, Somalia, South Sudan, Sudan, Syria, Venezuela and Zimbabwe. Covered Foreign Entity also includes any country that the Secretary of the DOE, in consultation with certain other senior executive branch officials, has determined to be engaged in conduct that is detrimental to the national security or foreign policy of the United States.
[3] Learning Resources, Inc. v. Trump, 607 U.S. ___ (2026).
[4] Ruth Liao, Up to 50% of Planned US Data Centers Are at Risk of Delays, Kimmeridge Says, Bloomberg (Aug. 26, 2026 12:17 PM CDT), https://www.bloomberg.com/news/articles/2026-08-26/up-to-half-of-planned-us-data-centers-may-face-delays-kimmeridge-says.