Power Play: New Executive Order Targets Electrical Grid Equipment

On August 26, 2026, President Trump issued EO 14420, prohibiting the acquisition, importation, transfer, or installation of foreign-produced bulk-power system electric equipment that meet certain criteria. The prohibitions are in response to the national emergency declared by President Trump pursuant to the International Emergency Economic Powers Act (IEEPA) and the National Emergencies Act (NEA) and based on foreign actors’ potential exploitation of vulnerabilities in U.S. energy infrastructure to harm U.S. national security, including through digital backdoors built into foreign-manufactured equipment that allow remote access and potential sabotage. According to the Order, this threat to national security has become even more acute given the rapid growth of advanced manufacturing, data centers, artificial intelligence, and defense production, which together have exponentially increased U.S. dependence on reliable electricity.

Prohibition

The Order prohibits those acquisitions, importations, transfers, or installations of foreign-produced bulk-power system electric equipment initiated after August 26, 2026 for which the Secretary of Energy (in coordination with the Office of Management and Budget (OMB), the Secretaries of the Departments of War (DoW) and Homeland Security (DHS), and the Director of National Intelligence (DNI) has determined that the transaction: (1) involves “bulk-power system electric equipment — or any critical component, software, firmware, digital service, maintenance service, or remote-access capability associated with such equipment — designed, developed, manufactured or supplied by persons owned or controlled by, or subject to the jurisdiction of a Covered Foreign Entity,” and (2) poses an undue risk to the U.S.  bulk-power system, critical infrastructure, or national security.

The Order’s definitions suggest that the prohibition could have broad applicability.

• “Covered Foreign Entities” are defined to include (1) countries subject to U.S. arms embargoes under the International Traffic in Arms Regulation (ITAR), 22 C.F.R. 126.1, which includes China, Iran, Venezuela, Russia, and North Korea, among others, or entities owned or controlled by the governments of such countries, or persons subject to those jurisdictions; and (2) any additional countries or persons designated by the Secretary of Energy.
• “Bulk-power system electric equipment” that may be subject to the Order includes:
  • Grid and Substation Equipment: reactors, capacitors, current coupling capacitors, shunt capacitor equipment, coupling capacity voltage transformers, substation transformers, substation voltage regulators;
  • Transmission, Metering and Protection: high voltage circuit breakers, automatic circuit reclosers, instrument transformers, protective relaying, metering equipment;
  • Generation Equipment: Large generators, small generators, backup generators, generation turbines;
  • Control and Safety Systems: Industrial control systems (including remote terminal units, programmable logic controllers, and intelligent electronic devices), distributed control systems, safety instrument systems; and
  • Power Conversion & Storage: Utility-scale and grid-connected inverters, battery energy storage systems, uninterruptible power supply (UPS) systems supporting critical infrastructure.

In determining whether an item of equipment is covered, the Order permits agencies to consider associated “software and firmware, remote access capabilities, lifecycle maintenance and update mechanisms, and other supply chain dependencies.” This has the potential to expand the scope of the Order.

The Order suggests that some bulk-power system electric equipment may be subject to restriction even where it was approved, acquired, or installed before the Order’s issuance. Upon the Secretary of Energy’s determination that bulk-power system electric equipment is subject to the prohibition, the Order permits the Secretary to impose conditions on the continued operations of the foreign-manufactured or -operated bulk-power system electric equipment acquired or installed before the date of the Order, including requirements to identify, isolate, monitor, secure, disconnect, replace, or remove such equipment. The Secretary may use phased compliance for equipment that predates the Order, and require mitigation measures, which could also be used as preconditions to waivers to the prohibition.

Notably, the Order does not set forth criteria for determining that the transaction presents national security, grid security, or critical infrastructure risks, nor does it set forth timelines upon which companies would be required to implement such directions. It does, however, suggest that forthcoming rules and regulations may include criteria for pre-qualification. 

Eyes on the Calendar

Within 120 days — or late December 2026 — the Secretary of Energy, in consultation with OMB, the DNI, and the Secretaries of DoW and DHS, is directed to publish rules implementing the Order. In addition to implementing the prohibition, the Order permits those rules to identify additional Covered Foreign Entities, identify any equipment or countries with respect to which transactions involving bulk-power system electric equipment warrant particular scrutiny, and establish licensing procedures for equipment that would otherwise be prohibited.

Within 180 days, the Order directs Secretary of Energy to provide the Federal Acquisition Regulation (FAR) Council with recommended FAR revisions to “adequately” consider national security risks in procurements related to energy infrastructure, and to prioritize the acquisition of U.S.-manufactured energy infrastructure. 

While much remains to be clarified regarding the prohibitions, they appear to be limited to the bulk-power system, which includes transmission lines rated at 69 kV or greater, and they do not extend to facilities used in local power distribution. As discussed above, the forthcoming rules and regulations may set forth a pre-qualification framework, licensing procedures, and additional criteria for determining whether a company’s equipment is included in the ambit of the prohibitions. 

Until then, companies should consider reviewing the electrical equipment in their bulk-power systems, identifying vendors that are not Covered Foreign Entities, and engaging with the Department of Energy regarding the impact of potential rules under this Order.