INTRO
Welcome to Womble Perspectives, where we explore a wide range of topics from the latest legal updates to industry trends, to the business of law. Our team of lawyers, professionals, and occasional outside guests will take you through the most pressing issues facing businesses today and provide practical and actionable advice to help you navigate the ever-changing legal landscape. With a focus on innovation, collaboration, and client service, we are committed to delivering exceptional value to our clients and to the communities we serve. And now our latest episode.
Host 1:
The focus of today’s discussion is a significant change in federal policy involving power inverters and the FCC’s Covered List. These devices are essential components of modern energy systems because they convert direct current power into alternating current power that can be used by homes, businesses, and the electric grid. Recently, the FCC narrowed a restriction that had initially swept in a much broader category of foreign-produced power inverters.
Host 2:
That change is important because inclusion on the FCC’s Covered List carries serious consequences. When equipment is placed on that list, the government has determined that it poses an unacceptable risk to national security or public safety. As a result, absent special approval, that equipment cannot be imported, marketed, or sold in the United States.
Host 1:
To understand the latest development, it helps to look at what happened earlier this year. In July 2026, the FCC added new foreign-produced power inverters to the Covered List, citing cybersecurity concerns associated with networked inverters connected to the U.S. power grid. The original definition was quite broad and applied to all power inverters that met the foreign-produced standard.
Host 2:
The concern, of course, stems from the increasing connectivity of energy infrastructure. Modern power equipment frequently includes communication and monitoring capabilities. While those features support grid management and operational efficiency, they can also raise cybersecurity questions when regulators evaluate potential vulnerabilities connected to critical infrastructure.
Host 1:
The major shift came after a recommendation from the Department of War. According to the article, the department concluded that inverters eligible for the Section 45X tax credit do not present the same security concerns identified in the original determination. Based on that assessment, those qualifying inverters should not be treated as foreign-produced for purposes of the FCC restriction.
Host 2:
That connection to Section 45X is especially noteworthy. The National Security Determination cited in the article explains that eligible components under Section 45X cannot include material assistance from prohibited foreign entities. In other words, the tax credit framework already contains safeguards designed to address certain supply chain and national security concerns.
Host 1:
The FCC also narrowed the technical definition of the inverters covered by the restriction. Under the revised approach, the rule applies specifically to devices that convert DC power to AC power, including bidirectional devices, operate in parallel with an electric utility, and are intended to supply common loads or deliver power to the utility system.
Host 2:
And there is another important qualifier. The device must also contain, or be configured to accept, technology that enables remote communication, control, sensing, monitoring, or data collection through wired or wireless connections such as Ethernet, Wi‑Fi, cellular, or Bluetooth. That means the revised definition focuses on equipment with connectivity features that may create cybersecurity considerations.
Host 1:
From a business perspective, the decision provides greater clarity for manufacturers, importers, and energy-sector participants. Companies that have structured products and supply chains to comply with Section 45X requirements may view the change as a sign that federal agencies are attempting to align security objectives with broader industrial and energy policy goals.
Host 2:
It also illustrates how interconnected federal regulatory frameworks have become. Tax incentives, national security reviews, supply chain restrictions, and communications regulations are no longer operating in separate silos. Organizations increasingly need to evaluate compliance across multiple regulatory regimes at the same time.
Host 1:
Another noteworthy aspect is the treatment of products already in the market. The FCC confirmed that inverter models that already hold FCC equipment authorizations remain authorized, including products that fall within the updated foreign-produced definition. That helps avoid additional uncertainty for existing authorized equipment.
Host 2:
Looking ahead, companies should continue monitoring developments involving energy infrastructure security, connected technologies, and federal sourcing requirements. The FCC’s revision may have narrowed the immediate impact of the inverter restriction, but it also signals a continuing emphasis on cybersecurity and supply chain integrity. For organizations operating in the energy and technology sectors, staying informed about how these regulatory priorities evolve will remain an important part of risk management and strategic planning.
OUTRO
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