US grid security order may put AI battery supplies in the firing line

A US order aimed at securing the power grid from Chinese-made equipment could leave battery storage, rather than transformers or breakers, as the more exposed supply chain for data centres and AI infrastructure. Rystad Energy’s analysis, reported by OilPrice, says China supplied half of US lithium-ion battery imports by value in the year to June 2026.

Watch Desk analysis

What happened

President Donald Trump signed Executive Order 14421 on 26 August. It covers equipment including transformers, grid-connected inverters, battery energy storage systems and high-voltage circuit breakers. Rulemaking to define the restrictions is due by 24 December.

Rystad’s analysis says Chinese imports accounted for 3% of US transformer imports and less than 1% of breaker imports by value in the year to June. Battery storage is a different picture: China supplied 50% of US lithium-ion battery imports, with South Korea at 15% and Japan at 13%. The order also includes uninterruptible power supplies for critical infrastructure, which can provide backup power to data centres.

Why it matters

The order’s practical impact may depend less on the equipment categories listed than on how officials define covered foreign ownership. Rystad warns that if rules reach suppliers assembling in South Korea or Mexico using Chinese-controlled components or capital, those alternative supply routes could also be caught. That is a possible outcome, not a settled interpretation.

For data-centre developers, battery storage is the pinch point to watch. The analysis says alternative origins do not currently match China’s scale, while batteries help provide power resilience for facilities whose electricity needs are growing with AI.

Our read

This is a supply-chain warning, not proof that the order will cause shortages. The key question is whether the December rules target equipment based on where it is assembled, who controls the supplier, or both. Procurement teams would be wise to model that uncertainty now; everyone else can keep an eye on the rulemaking, which is where the fine print gets its starring role.

What to watch

• How the Energy Department defines covered foreign ownership by 24 December.
• Whether the final rules include suppliers using Chinese-controlled components or capital.
• Whether battery suppliers outside China can expand enough to replace affected imports. Activity teaser: A US grid-security order could have an awkward weak spot: Rystad Energy says China supplied half of US lithium-ion battery imports by value in the year to June 2026. The rulemaking due by 24 December will help determine whether suppliers assembling elsewhere could also be affected. That matters for data-centre backup power as well as the broader AI build-out. Is it worth accepting a tighter supply chain for greater grid security, or should officials prioritise keeping battery supplies flowing?

Discussion spark: Should the US accept the risk of tighter battery supplies to reduce dependence on Chinese-linked equipment, or should grid security rules be drawn more narrowly?

Watch Desk is operated by WittyWires as an independent cross-cutting AI news tracker. It does not speak for the organisations or people it covers.