US executive order targets Chinese grid hardware, but battery storage serving AI data centers is more exposed

A White House executive order designed to secure the US power grid from Chinese-made equipment is more likely to disrupt battery storage supply chains than the transformers and switchgear it aims to target, according to new Rystad Energy analysis. Executive Order 14421, signed by President Donald Trump on 26 August 2026, names substation transformers, grid-connected inverters, battery energy storage systems, high-voltage circuit breakers and generation turbines as covered equipment. Rystad Energy finds that US reliance on Chinese transformers and inverters has already fallen substantially, leaving limited practical exposure in those categories. However, battery storage paints a more vulnerable picture: China supplied 50% of US lithium-ion battery imports by value in the 12 months to June 2026, and no alternative origin comes close to matching that scale. The order explicitly names the growth of data centers and artificial intelligence as the reason a supply disruption now carries national security consequences. 

The order is written around the grid, but the supply chain problem it creates falls most squarely on battery storage. Transformers and breakers have low Chinese import exposure today because the market shifted before this order arrived. Battery storage has not made that transition yet, and there is no alternative origin that can absorb a 50% Chinese share at the volumes data centers and AI infrastructure now require.

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For transformers and high-voltage circuit breakers, the order arrives after the market has largely already moved. China supplied just 3% of US transformer imports and under 1% of breaker imports by value in the 12 months to June 2026. South Korea, Mexico and Canada collectively account for 74% of breaker imports and 48% of transformers. Hyosung Heavy Industries disclosed $285.3 billion of ultra-high-voltage transformer contracts with two US hyperscalers on 15 September, confirming that Korean suppliers are winning on the strength of their US manufacturing plants rather than on the order’s exclusions alone. For inverters, the retreat from Chinese supply was already under way. China’s reported export value to the US fell 34% between 2022 and 2025 as the US 45X advanced manufacturing production credit pulled inverter assembly onshore. US inverter capacity is set to reach 126 gigawatts by 2028. 

The fuller picture on battery storage turns on rulemaking due by 24 December 2026. The order covers battery energy storage systems and expressly includes uninterruptible power supply systems supporting critical infrastructure, extending its reach into the behind-the-meter battery systems data centers use for power resilience. South Korea follows China at 15% of US lithium-ion battery imports and Japan at 13%, with no single alternative capable of absorbing displaced Chinese volume at scale. A critical open question is how broadly the rulemaking defines Covered Foreign Entity ownership. If the Secretary of Energy draws that definition to capture suppliers assembling in South Korea or Mexico using Chinese-controlled components or capital, origins the market currently prices as solutions would themselves become covered, leaving the US short across multiple equipment categories at once.

The December rulemaking is the order’s most consequential moment. If ownership is drawn broadly enough to follow Chinese capital into South Korean or Mexican assembly plants, the supply chain the tech industry is currently relying on to keep AI infrastructure buildout on schedule becomes part of the problem. That outcome is not a certainty, but it is a plausible reading of the text, and procurement teams at hyperscalers should be modelling it now.

Contacts  
Geoffrey Hebertson 
Senior Analyst, Renewables and Power 
geoffrey.hebertson@rystadenergy.com 

 
Katie Keenan 
Senior Media Relations Manager 
Phone: +1 713 301 9300 
katie.keenan@rystadenergy.com 

About Rystad Energy  
Rystad Energy is a leading global independent research and energy intelligence company dedicated to helping clients navigate the future of energy. By providing high-quality data and thought leadership, our international team empowers businesses, governments and organizations to make well-informed decisions. 

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