Brown & Brown: FEOC Rules Raise Tax Credit Risks for Renewable Energy Projects
- Foreign Entity of Concern restrictions threaten renewable energy tax credit eligibility, creating transaction risks that could affect billions of dollars in projects.
- Disqualifying foreign ownership, financing or supply-chain connections could trigger credit reductions, disallowance or repayment, undermining project economics.
- Regulatory uncertainty complicates capital commitments as developers, investors and tax credit buyers make decisions before Treasury and IRS guidance is complete.
- Tax insurance may cover losses from IRS challenges to well-supported FEOC positions, subject to policy terms and robust third-party analysis.
- Early diligence on ownership, financing and supply chains is critical to assessing exposure and securing coverage before committing capital.
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