Do You Know Where Your BESS Comes From?

As the demand for fail-safe battery energy storage grows, understanding the origin of your Battery Energy Storage System (BESS) is no longer optional—it is a financial necessity. New regulations under the Inflation Reduction Act (IRA) and the “One Big Beautiful Bill Act” (OBBB) have introduced strict Foreign Entity of Concern (FEOC) requirements that directly impact tax credit eligibility.

What is a Foreign Entity of Concern (FEOC)?

To qualify for clean energy tax credits, projects beginning construction after December 31, 2025 cannot source battery components from prohibited foreign entities, such as those with specified ties to China, Russia, Iran, or North Korea.”

A company can be excluded from incentives if a foreign entity has “meaningful involvement” through:

• Investment: Ownership stakes or financial control.
• Leadership: Executives or board members tied to the foreign entity.
• Material Assistance: Substantial support regarding technology, intellectual property, or manufacturing.

The Timeline for Compliance

The rules for storage projects are phasing in to encourage domestic production. For projects beginning construction after December 31, 2025, at least 55% of a project’s total direct costs must be attributable to non-Prohibited Foreign Entity (PFE) sources under the MACR. This threshold rises 5% annually, reaching 75% by 2030.

The Trade-Offs:

Compliant vs. Non-Compliant BESS

Choosing a FEOC-compliant system involves trade-offs, primarily between upfront cost and long-term security and value.

• FEOC Compliant Systems: eligible for government incentives and “Build America, Buy America” projects. They offer lower trade risk, stronger cybersecurity, and lower logistics costs due to domestic sourcing, though they may have higher upfront costs and longer lead times.
• Non-Compliant Systems: typically cheaper upfront with faster lead times, but they have limited access to incentives, higher exposure to geopolitical trade risks, and potential cybersecurity concerns.

A Proven, Compliant, Fail-Safe Battery Energy Storage Solution

Viridi has proactively embedded FEOC compliance into its operations through rigorous supplier vetting and U.S.-based manufacturing. With the recent acquisition of certain assets from U.S. BESS Corporation, Viridi has expanded its portfolio to offer scalable, value-driven storage solutions.

“This acquisition strengthens Viridi’s role as a platform for safe, specialized energy solutions,” said Jon M. Williams, CEO of Viridi. “U.S. BESS Corporation expands our ability to meet customers where they are—with products designed for real-world performance, value, and resilience.”

Viridi’s battery energy storage portfolio is sourced and manufactured to exceed the FEOC material assistance thresholds, including the most stringent requirements phasing in through 2030. That means customers can pursue Investment Tax Credit benefits today, without waiting for supply chains to catch up.

“By manufacturing in the U.S. with a fully traceable, FEOC compliant supply chain, we’re delivering zero-emissions power that developers, building owners, and critical infrastructure operators can trust — built to help them qualify for the incentives that can make projects possible.” said Williams.

Key Innovation: The RPS150 Viridi’s flagship RPS150 Battery Energy Storage System (150kWh) is a decentralized, modular unit designed for durability and point-of-use installation. Unlike centralized lithium-ion systems, it utilizes proprietary fail-safe technology to eliminate thermal propagation risks.

Real-World Applications for fail-safe battery energy storage

Viridi’s compliant, fail-safe battery energy storage systems are already powering critical infrastructure:

• Public Library: A fail-safe system for a public building, ensuring safety in occupied spaces.
• 105-Unit Apartment Building: The largest indoor lithium-ion system in an occupied U.S. residential building.
• Wastewater Pumping Station: Modernizing wastewater pumping stations with reliable backup power to reduce diesel reliance.

To learn more about how compliant battery energy storage can benefit your organization, contact our Energy Experts.

FEOC Frequently Asked Questions

Viridi Press Release

This material is for informational purposes only and is not tax advice; ITC eligibility depends on project-specific factors and should be confirmed with a qualified tax advisor.