US government bans foreign-produced inverters

The decision does not apply to inverters that have already been acquired but only to new devices. This will be a significant issue for solar projects in development as the US currently does not have enough capacity to supply the domestic market.

Inverters that have been granted “Conditional Approval” from either the Department of War – formerly known as the Department of Defense – or the Department of Homeland Security will be exempt from the ban, as they would be deemed not to pose unacceptable risks. Companies will be required to submit an application to be added to that list. Guidance regarding that process is accessible here.

Lack of domestic-manufactured PV inverter supply

Data from PV Tech Research forecasts that the US will reach 40GW of annual capacity by the end of the year, which would remain below the US Energy Information Administration (EIA) forecast for utility-scale solar PV installations in 2026.

In its determination to ban inverters, the FCC used data from 2020, writing that only 7% of US inverter shipments came from US-headquartered manufacturers, “with utility-scale applications dominated by foreign companies.” More domestic inverter capacity has been built in the US since then, boosted by the incentives from the Inflation Reduction Act (IRA).

Brendan Carr, chairman of the FCC, said: “I welcome these Executive Branch national security determinations, and I am pleased that the FCC has now added foreign produced advanced robotics and power inverters to the FCC’s Covered List.”

A draft ban on Chinese solar inverters was reported earlier this month by Reuters, over concerns that they pose a risk to the grid. In effect, the ban turned out to be much wider than previously reported and will affect all importing countries.

In a FAQ regarding the recent update, the FCC wrote the following: “The nationality of the entity or entities producing the advanced robotic device or power inverter is not relevant to whether such devices are ‘foreign produced.’”

In order for inverters to qualify as a “domestic end product,” they must meet a content threshold, which currently sits at 65% until the end of 2028, when it increases to 75%.

The decision from the FCC comes months after an investigation from the Department of Energy found no evidence of malicious communication equipment from Chinese-made inverters at the beginning of the year.

In a public notice published yesterday, the FCC outlined that the inclusion of power inverters was due to a National Security Determination that addresses unacceptable risks posed by power inverters produced in other countries.

“The lack of a secure US supply chain for inverters and the continuous inflow of foreign-produced or controlled inverters and inverter components poses threats to US economic and national security… Inverters’ remote connectivity introduces additional vulnerabilities which compound as inverter-based resources proliferate on the US grid. These vulnerabilities could enable foreign firms to turn off the inverters or use them to collect and exfiltrate data, facilitate remote access and surveillance by foreign government actors, or be otherwise exploited through a cyberattack,” states the National Security Determination.

The US decision takes a much harsher approach than the one implemented in the EU earlier this year, which banned EU funds from supporting energy projects using Chinese-made inverters only – a ban that could end up affecting nearly 14% of the EU’s solar demand through 2030, according to an analysis from energy market research firm Wood Mackenzie.

Earlier this week, PV Tech published a feature regarding the ongoing cybersecurity concerns in the solar PV and energy storage industry and what steps can be taken to minimise cyber threats (subscription required).