U.S. inverter market faces policy, supply headwinds despite safe harbor pipeline

A new report from Intertek CEA suggests that while U.S. inverter demand will grow at a 6% CAGR through 2028, developers face a tightening regulatory environment driven by “Foreign Entity of Concern” (FEOC) rules and cybersecurity mandates.

May 6, 2026 Ryan Kennedy

Image: Greg Nash/US Army Corps of Engineers, Baltimore District via Wikimedia Commons

U.S. solar and energy storage developers are navigating a complex intersection of trade policy and domestic content requirements as the industry shifts toward local manufacturing.

According to the PV & ESS Inverter Report from Intertek CEA, the market is currently supported by a pipeline of “safe-harbor” projects, though long-term growth will increasingly depend on demand from data centers and artificial intelligence infrastructure.

The FEOC challenge and trade barriers

A central hurdle for the U.S. market is the One Big Beautiful Bill Act (OBBBA), which introduces strict Foreign Entity of Concern (FEOC) rules. The regulations present a significant challenge for developers attempting to balance the procurement of low-cost Chinese inverters with the need to qualify for federal tax credits. Stakeholders are now required to conduct deep-tier assessments of supplier ownership, bill-of-materials, and contractual “effective control” to ensure compliance.

While U.S. tariffs on inverters have reached up to 45%, the report notes that the project-level impact of these duties is currently modest compared to the higher capital costs of non-U.S. solar modules and battery cells. Nevertheless, the trade barriers are expected to catalyze a shift toward U.S.-based production capacity.

Cybersecurity

Cybersecurity has emerged as a regulatory focus, with proposed U.S. and EU policies aiming to restrict Chinese-made inverters in critical infrastructure. However, a January 20, 2026, report from the US Department of Energy (DOE) provided a more nuanced outlook.

After inspecting approximately 30 inverters, the DOE found no evidence of malicious “concealed” wireless devices, contradicting earlier media speculation. The department characterized the overall grid-wide risk as “low,” noting that:

Discrepancies in documentation were generally deemed non-malicious and non-intentional.
Risk is universal, meaning both foreign and domestic equipment can pose threats if misconfigured.
Mitigation strategies will focus on detailed firmware analysis and ensuring operations and maintenance (O&M) are handled by U.S.-based firms.

Pricing and technology trends

The price of U.S.-manufactured utility-scale inverters is expected to carry a premium over imports as the domestic supply ecosystem matures, said CEA.

While global prices have plummeted 76% over the last decade, U.S. import prices are forecasted to stabilize around 2026 before seeing gradual decreases through 2030.

On the technology front, two major trends are reshaping project economics:

Grid-forming inverters: These are increasingly utilized to enhance grid stability by acting as a voltage source, particularly in areas with high renewable penetration.
2000 V systems: The shift to high-voltage 2000 V products is expected to reduce overall project costs as higher power outputs outweigh marginal component cost increases.

Supply outlook through 2030

U.S. demand for inverters is projected to peak in 2028 before a temporary softening as 2025 safe harbor materials are exhausted and specific tax credits expire. Although several manufacturers have announced U.S. capacity expansions, Intertek CEA warns that market uncertainties may prevent all announced projects from reaching completion on schedule.

While the U.S. solar industry aims for self-sufficiency, imports remain a logistical necessity to meet total U.S. demand through the end of the decade, said the report.

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