Why some US BESS developers are forgoing the investment tax credit

energy-storage.news Jun 2, 2026

Why some US BESS developers are forgoing the investment tax credit

Curated by Shubham · TechCapsules · Jun 2, 2026

AI-summarised brief · reviewed before publication

Some US battery energy storage system (BESS) developers are forgoing the federal investment tax credit (ITC) due to the costs of compliance with foreign entity of concern (FEOC) restrictions. The economic trade-off hinges on whether the 30%-40% ITC benefit outweighs the combined costs of FEOC-compliant equipment and potential project delays. FEOC-compliant BESS currently carries price premiums ranging from $70 to $200 per kWh. Tax equity investors remain cautious, creating a financing gap that could push more developers toward non-ITC pathways. Certain project segments, such as merchant projects and small-scale projects, are more likely to forgo ITC benefits.

💡 Why It Matters

· Forging the ITC allows developers to avoid costly FEOC-compliant equipment and potential project delays, prioritizing project timelines and budgets over tax benefits.
· This strategy is particularly appealing for projects with tight margins or fixed delivery schedules.

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