Concentro Highlights Partial Clarity, Persistent Risks in IRS FEOC Guidance

Consultancy firm Concentro is spotlighting the impact of IRS Notice 2026-15, which delivers incremental clarity on Foreign Entity of Concern rules for U.S. clean energy and infrastructure projects. The firm says the guidance helps on cost allocation and compliance mechanics but leaves core questions around FEOC ownership, control, and recapture risk unresolved.

Concentro notes that domestic content safe harbor tables can now be used via a “Cost Percentage Safe Harbor” to calculate material assistance cost ratios, excluding non-listed components such as steel and iron. The notice also introduces a temporary reliance safe harbor for supplier certifications, including partial certificates focused on potentially FEOC-exposed direct costs.

According to Concentro, these changes may reduce administrative friction for project sponsors and their supply chains, easing near-term compliance and financing discussions. Added detail on tracking and averaging methods for allocating costs to projects, qualified interconnection equipment, and lookback periods is expected to improve tax incentive modeling.

However, the firm underscores that the IRS has not yet clarified how FEOC ownership and effective control will be defined or how recapture mechanisms will operate over time. This lingering ambiguity preserves a layer of regulatory and tax risk that is particularly relevant for tax equity investors, lenders, and developers committing long-dated capital.

For investors, Concentro believes the notice offers enough procedural clarity to support more confident modeling of Inflation Reduction Act–linked benefits, but not enough to fully resolve long-term FEOC exposure. As a result, detailed transaction structuring, rigorous supply chain due diligence, and conservative risk assessments remain central to project economics and valuations in the sector.