US BESS industry is ‘primed for years of growth’: Enertis Applus+ on financing storage in the FEOC era

Lauwers previously led energy storage engineering at DNV, managing GW-scale BESS projects across the US and Canada. Before that, he was director of Emerging Technology at the Massachusetts Department of Energy Resources, overseeing BESS in the state’s SMART Programme to promote renewables and developing the Clean Peak Standard.

Energy-Storage.news: What documentation and supply chain traceability do you now require from battery manufacturers and EPC contractors for ITC/PTC eligibility? Are projects failing diligence that would’ve passed a year ago?

William Lauwers: As an Independent Engineer (IE) or an Owner’s Engineer (OE), we’re not in a position to require anything, and our factory audit work doesn’t necessarily follow pass-or-fail criteria. Instead, we deal with levels of risk identification and quantification, along with providing recommended available mitigation measures.

The safe and reliable operation of BESS has always been a priority for us. A concern I have today is how fast the FEOC requirements take effect. I’m worried that focusing only on compliant systems could come at the expense of appropriate product selection and sufficient factory Quality Assurance and Quality Control (QAQC) practices. Generally, it takes time to establish new battery production lines, and even once commissioned, it can take months to approach target production yields.

In a market that may be FEOC-compliant, supply-constrained, and where sellers are incentivised to increase yield, releasing products that could be faulty and should have been removed during QAQC is a real concern. So lately, we’ve been reiterating our recommendations to clients to include factory audit rights in their supply agreements and to follow through on limited in-line inspections and factory-acceptance-test witnessing.

The saving grace is that the BESS industry has come a long way over the past several years, with substantially improved products and understanding of appropriate design for manufacture.

Are tax equity providers avoiding non-compliant equipment, or are deals still happening with risk adjustments? What’s the impact on deal flow and pricing?

I have not personally witnessed a tax equity provider walk away from a project as a result of non-compliant ITC equipment. However, the introduction of FEOC and the associated Material Assistance Cost Ratio (MACR) is still relatively new. So, for most projects to date, it’s been business as usual to complete past pipelines with safe-harbour equipment. Recent projects have included FEOC compliance guarantees in contracts, but nothing has been tested in an audit to date.

Going forward, Developers are weighing whether it’s better to choose lower-cost components and forego the ITC, or pay a premium to ensure tax credit compliance. Since they will already be financing solar and wind projects without credits, we expect a similar financing model to emerge for BESS.

FEOC guidance is still an evolving space, and BESS providers are just starting to get policy-responsive domestic manufacturing online from the Inflation Reduction Act. But a domestic content-eligible product is not inherently a FEOC-compliant product.

We haven’t really seen a change in deal flow yet; everyone is still full-steam ahead on their safe-harbour pipelines, but I’m sure the impact of FEOC will be felt soon.

Are you seeing a competitive advantage for manufacturers who can clearly demonstrate compliance versus those who can’t?

Clear, demonstrable compliance would almost certainly be a competitive advantage. FEOC requirements include provisions for ownership, control rights, technology licensing, and supply-chain dependence. Legal and contractual pitfalls are just as numerous as technical ones. So, it’s hard to make definitive claims. All manufacturer guarantees still come with layers of risk to be assessed.

How are contractual protections evolving post-January 2026?

Vendors started advertising FEOC compliance before official guidance and interpretations were released. That said, the contractual provisions remain an evolving space. Some companies are offering increased supply chain traceability, but their visibility on the traces is limited. In almost all cases, they cannot track raw materials to the source, so they simply provide a corporate letter/certificate claiming compliance instead of independent, third-party verification.

At this point, it’s all about contractual posturing, getting compliance guarantees and rights to traceability materials into major agreements. The follow-through still remains to-be-seen.

From a technology and manufacturing perspective, how realistic is full traceability for battery cells and components?

Full ‘end-to-end’ traceability is rarely achievable in practice at the level typically requested. The common initial request today is full ‘mine & refine’ to an integrated system for all raw materials.

At the cell factory level, ‘manufacturing traceability’ is typically robust and realistic. In multiple battery‑cell factory audits that we’ve witnessed, cells and materials are identified with RFIDs or QR codes and tracked through the MES. It’s typically limited to batch and process traceability inside the factory, and isn’t intended to provide a verifiable chain of custody back to every upstream node.

Where traceability becomes ‘difficult to imagine’ is when stakeholders ask for raw-material provenance and multi‑tier disclosure at levels that conflict with how the battery supply chain is structured today.

Even when a supplier’s internal systems (ERP/MES/WMS) can maintain unique batch IDs and link inbound goods receipts to internal batches, auditing beyond the immediate factory quickly becomes evidence-heavy and depends on what sub-suppliers are willing to share. To date, our traceability audit methods have focused on factory system integrity reviews and document verification across supply nodes.  

There are competitive reasons for companies to refuse to share materials. A detailed MACRS calculation would require all vendors to provide their pricing and their suppliers’ pricing.

Many battery cell formats have approached commodity status, such as the 280Ah cells. Cells are not necessarily produced for specific products, let alone specific projects, which can cloud project-specific traceability.

The market is still coming to terms with defining a reasonably achievable, sufficient traceability program. I expect we’ll see how well they cover FEOC requirements through changes to tax credit liability insurance rates.  

Despite the challenges mentioned, in my opinion, the BESS industry is primed for years of growth. Veterans of the wind and solar industries understand that policy volatility is nothing new, and we are well-prepared to adapt.

The Energy Storage Summit USA 2026 will be held from 24-25 March 2026, in Dallas, TX. It features keynote speeches and panel discussions on topics like FEOC challenges, power demand forecasting, and managing the BESS supply chain. ESN Premium subscribers can get an exclusive discount on ticket prices. For complete information, visit the Energy Storage Summit USA website.