A battery supplier can offer the right price, production capacity and delivery date, yet a buyer still has to answer a separate question. Who controls the company, its technology and the materials inside the product? That question has become more consequential for U.S. battery manufacturing and energy storage projects seeking federal tax credits, and factory location alone no longer answers it.
Rules concerning prohibited foreign entities require some taxpayers to examine ownership and control, while separate material assistance tests reach into the components and materials used in eligible products or projects. The Internal Revenue Service (IRS) released interim guidance on this question in Notice 2026-15 on February 12, 2026, setting out a material assistance cost ratio that facilities and storage technologies must clear to remain eligible for credits under Sections 45Y, 48E and 45X. For energy storage projects specifically, the threshold starts at 55% in 2026 and climbs to 75% by 2030.
For procurement leaders, this creates an opportunity to make supplier qualification more useful. A clear record of ownership, production relationships and material sourcing can identify problems while buyers still have time to adjust a contract or select another supplier. The work has to be tied to the particular project and tax credit. There is no single ownership check that establishes eligibility for every battery purchase, and procurement teams are already finding that trade-compliance data and sustainability data live in different systems, which slows down the review.
IRS Notice 2026-15 Reaches Past Factory Location Into Ownership and Licensing
A battery assembled in the United States may still rely on imported cells, cathode materials or graphite. A company's place of incorporation may likewise say little about who holds voting rights, appoints directors or controls essential manufacturing technology. Procurement teams need to understand those relationships before treating a domestic factory address as the complete sourcing story, a lesson already playing out in how battery makers are re-routing electrolyte and materials sourcing around foreign entity restrictions.
The distinctions matter under federal tax credit rules. The tests for a taxpayer's status, contractual control and material assistance are related, but they are not interchangeable. Notice 2026-15 provides methods for calculating material assistance, including approaches involving supplier certifications, and it addresses circumstances in which licensing rights can affect who effectively controls a project. Legal analysis of the notice notes that IP licensing agreements entered into or modified after July 4, 2025 with a specified foreign entity can disqualify a project outright, according to a February 2026 client memo from Willkie Farr & Gallagher. Eligibility depends on the applicable credit and the facts of the transaction, and the notice itself remains the starting point for those determinations.
An ownership audit therefore needs more than a list of shareholders. Depending on the transaction, buyers may need to establish which entity makes a component, who supplies its constituent materials, and what rights a licensor retains over production. Asking those questions at bid stage is more useful than discovering an incomplete record after equipment has been ordered.
Top Refiners Still Hold Most of the Processing Capacity Battery Buyers Depend On
The practical response is to make evidence part of the purchase process. A request for proposals can identify the ownership, control and sourcing information a project needs, and contract terms can require suppliers to notify the buyer of changes to those facts within a defined period. That approach also gives capable suppliers a way to compete on verifiable information rather than price alone. Where documentation reveals a gap, the parties may have time to identify an alternative component or evaluate another source before a contract locks the buyer in.
Battery supply chains remain concentrated. The International Energy Agency's (IEA) Global Critical Minerals Outlook 2026 found that the top three refining nations are expected to hold roughly 82% of refined material supply through 2035, with China continuing to expand its refining capacity faster than competitors. The same outlook shows global investment in critical minerals fell 9% in 2025, which narrows the pool of alternative suppliers just as buyers need more of them. Ownership checks do not create replacement capacity. They can, however, show a buyer which parts of its supply plan depend on a limited set of companies or processing routes.
What Procurement Should Verify Before the Next Safe Harbor Tables Land
For a storage developer, a late finding about a supplier can affect financing assumptions, equipment selection and construction timing. For a battery manufacturer, it can complicate documentation for an advanced manufacturing credit. Even buyers that are not claiming a credit directly may need to provide ownership and sourcing information to a customer or project partner that is.
Treasury and the IRS have said they intend to publish additional safe harbor tables and follow-on regulations that will eventually replace the interim rules in Notice 2026-15. Until those tables arrive, taxpayers can rely on the interim safe harbors, so the ownership and material assistance records a company builds now under the current rules will need to hold up against a stricter framework later. Procurement teams that start documenting ownership, licensing and material sourcing today are the ones least likely to have to rebuild that record when the permanent rules take effect.
