Trump Executive Order Targets Foreign-Sourced Bulk-power Equipment, Expands Department Of Energy Authority

Potential restrictions: The Secretary of Energy may regulate transactions involving covered Bulk-Power System electric equipment that pose U.S. national security risks, including existing equipment that may need to be removed or isolated.

No immediate restrictions: The Department of Energy must make required findings and propose implementing regulations within 120 days. However, companies can begin preparing now.

Broad scope: The definition of “Bulk-Power System Electric Equipment” is very broad, and includes battery storage systems, utility-scale inverters, industrial control systems, generators, and related software and firmware. The Executive Order does not apply to equipment used in local electric energy distribution facilities.

Foreign nexus: The Executive Order targets equipment designed, developed, manufactured, or supplied by entities with a sufficient nexus to “Covered Foreign Entities,” which currently are defined as countries against which the United States maintains an arms embargo. The Secretary of Energy may expand the list upon a finding of harm to U.S. national security or foreign policy.

On August 26, 2026, President Trump issued Executive Order 14421, “Declaring a National Emergency to Secure the United States Bulk-Power System” (the Order). The Order declares a national emergency with respect to risks posed by foreign-produced equipment used in the U.S. bulk-power system and delegates significant authorities to the Secretary of Energy to review, restrict, condition, and potentially require the replacement of certain foreign-sourced energy infrastructure equipment.

The Order may be viewed against the backdrop of the Administration's broader effort to reduce U.S. dependence on Chinese technology and manufacturing in critical infrastructure sectors. Although the Order applies to equipment linked to any "Covered Foreign Entity," its practical focus is likely to fall most heavily on Chinese suppliers, given China's dominant position in numerous energy and power-sector supply chains, including utility-scale inverters, battery energy storage systems, industrial control systems, and related electronics. The Order follows a series of recent measures aimed at Chinese participation in the U.S. energy and technology ecosystem, including Federal Communications Commission actions addressing Chinese-manufactured power inverters and other types of connected equipment, Section 232 initiatives affecting solar and industrial supply chains, and the Uyghur Forced Labor Prevention Act entity list expansion. Taken together, these developments reflect an increasingly coordinated effort by the U.S. government to address perceived national security risks associated with Chinese-origin hardware, software, and supply-chain dependencies. The timing also is notable as Washington and Beijing continue preparations for a potential Trump-Xi summit, underscoring the Administration's willingness to pursue targeted economic and national security measures affecting Chinese exporters and technology providers even as broader diplomatic engagement remains ongoing.

National emergency

The Order finds that certain foreign actors create and exploit vulnerabilities in equipment used in the U.S. bulk-power system, including through potential remote-access capabilities. The Order notes that growing electricity demand from advanced manufacturing, data centers, AI, and defense production has magnified the consequences of a successful attack or disruption.

Authorities

To address those risks, the Order authorizes the Secretary of Energy (the Secretary), in consultation with other relevant agencies, to determine whether certain transactions (acquisitions, imports, transfers, or installations) involving foreign-produced bulk-power system electric equipment:

• Were initiated after the date of the Order;
• Involve “Bulk-Power System Electric Equipment” that was designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of a "Covered Foreign Entity"; and
• Pose an unacceptable risk to the national security of the United States.

Upon making such a determination, the Secretary may use all authorities available under the International Emergency Economic Powers Act (IEEPA), including prohibiting the transaction or imposing mitigating measures designed to address the national security risks. The Secretary may also choose to impose conditions on bulk-power electric equipment that was installed or acquired before the date of the Executive Order, including requiring the replacement or removal of existing equipment. Before imposing such conditions, the Order directs the Secretary to consider the effects on reliability and safety, the availability of secure replacements, and continuity of essential service. Finally, the Secretary is also authorized to create a pre-clearance process pursuant to which the Department of Energy (DOE) may issue a list of pre-qualified vendors.

In practical terms, the Secretary may choose to regulate specific transactions between two or more parties. Intervening in specific transactions would require some notice to involved parties and an opportunity to respond. The Secretary may choose, instead, to address a broad category of transactions through regulation. Regulations issued pursuant to IEEPA are subject to the Administrative Procedure Act and should require notice and comment.

Although there are no immediate effects of the Executive Order, the Secretary is directed to take several steps over the coming months.

• Within 120 days of the Order, the Secretary, in consultation with other agency heads, shall publish rules implementing the authorities;
• Within 180 days of the Order, the Secretary shall develop and submit a set of recommended revisions to the Federal Acquisition Regulations (FAR) that mitigate national security risks in federal procurement of energy infrastructure and prioritize United States-manufactured energy infrastructure. The FAR Council then has 90 days to consider whether to propose for public comment the Secretary’s recommended amendments; and
• As soon as practicable, the Secretary shall identify particular bulk-power electric equipment designed, developed, manufactured, or supplied by persons with a sufficient nexus to a Covered Foreign Entity that pose risks to U.S. national security and shall submit to the President, through the National Security Advisor, recommendations on ways to address those items.

Definitions

“Covered Foreign Entity” is a defined term and refers to countries against which the United States has an arms embargo, specifically: Belarus, Burma, China, Cuba, Iran, North Korea, Syria, and Venezuela. The Executive Order also allows the Secretary to add other countries and persons whom the Secretary determines are “engaged in conduct that is detrimental to the national security or foreign policy of the United States.”

“Bulk-Power System” refers to the high-voltage electric grid and the resources needed to operate it, including transmission lines operating at 69 kV or above, but it does not include local electric distribution systems. The definition of “Bulk-Power System Electric Equipment” is very broad, but expressly includes:

• Utility-scale and other grid-connected inverters;
• Battery energy storage systems (BESS);
• Uninterruptible power supply (UPS) systems supporting critical infrastructure;
• Substation transformers and other major transmission equipment;
• Industrial control systems (including remote terminal units, programmable logic controllers, and intelligent electronic devices); and
• Distributed control systems.

The Secretary and relevant agencies may also consider software, firmware, lifecycle maintenance and update mechanisms, and other “supply chain dependencies” that could present an unacceptable risk to the bulk-power system.

Practical implications

The ultimate impact of this Executive Order greatly depends on how the Administration implements the authorities. However, there are several actions that companies should consider taking now.

1. Audit supply chains. Members of the energy sector should fully audit their hardware and software supply chains for all the equipment listed in the definition of “bulk-power system electric equipment.” This includes not only the names and locations of suppliers, but also who owns, controls, and directs those suppliers. Priority should be given to any logic-bearing hardware, which may be susceptible to remote manipulation.
2. Assess Chinese-sourced components. Although the Order includes all countries against which the United States maintains an arms embargo, China will be the participant of greatest concern. For current and future procurement decisions, assess alternative suppliers. Note that stockpiling Chinese components may be a wasted expense if such equipment is later restricted.
3. Evaluate an onshoring plan. Looking at other programs recently implemented, including through the Federal Communications Commission’s recent Covered List additions and the Department of Commerce’s 232 actions, the Administration appears eager to incentivize greater onshoring. Impacted companies should determine whether there are ways they could do at least some assembly or manufacturing in the United States. While the Executive Order clearly signals favorable treatment for U.S. manufactured, assembled, and produced goods, foreign components may still be subject to potential restrictions. Nonetheless, equipment that undergoes final manufacturing, assembly, or production in the United States will be viewed more favorably by the Administration because it creates jobs in the United States and because the Administration may assess final assembly in the United States to be a risk mitigation measure.
4. Review installed equipment. Existing equipment is not necessarily grandfathered. Companies should analyze such equipment and determine where this equipment may contain Chinese components. If these components are present, companies should assess ways to mitigate the associated risks. Engagement with the Administration may be helpful to discuss methods of mitigating risk, such as using U.S. designers and suppliers to deploy future software updates to Chinese hardware. The Administration may also be interested in understanding the cost of replacing that equipment, the disruption to U.S. energy supply, and how long it might take for alternative suppliers to be available in sufficient scale. Thinking on these issues and assessments should begin now.
5. Finally, monitor DOE actions and rulemaking closely. If the Administration adheres to the schedule described in the Executive Order, we could see proposed regulations in four months. The effort likely will be led by DOE’s Office of Cybersecurity, Energy Security, and Emergency Response (CESER).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.