The material assistance cost ratio for battery storage

Updated 2026-10-04

The material assistance cost ratio (MACR) is the test that decides whether a US battery storage project has too much equipment from prohibited foreign entities to claim the section 48E investment credit. It applies to storage that begins construction after December 31, 2025.¹

The formula

For a qualified facility or energy storage technology, the ratio is:¹

MACR = (all manufactured-product costs − costs of products made by a PFE) ÷ all manufactured-product costs

The costs are the taxpayer's direct costs for the manufactured products, components included, that are part of the project when construction is complete. If the ratio is below the threshold for the year construction begins, the project has material assistance from a PFE and does not qualify.

Thresholds

Storage starts higher than generation and rises 5 points a year to 75%. Battery makers claiming the section 45X manufacturing credit face their own schedule for qualifying battery components, by year of sale: 60% in 2026, 65% in 2027, 70% in 2028, 80% in 2029 and 85% in 2030 and later.

A worked example

Take a storage project whose manufactured products cost $20 million:

MACR = ($20M − $9M) ÷ $20M = 55.0%.

• Construction begins in 2026: the threshold is 55%, so the project passes.
• Construction begins in 2027: the threshold is 60%, so the project fails.
• Construction begins in 2028: the threshold is 65%, so the project fails.

The same cells from a supplier that is not a PFE would bring the ratio to 100%. Cells are usually the biggest cost in a battery system, so who made them, and who owns that company, decides the outcome. That is why the directory screens cell suppliers' ownership, not only their country.

Supplier certifications and safe harbors

Until Treasury publishes new safe harbor tables, and for construction beginning up to 60 days after it does, a taxpayer may:²

• use the cost-share tables in Notice 2025-08 to set the share of total direct costs for listed components; and
• rely on a certification from each supplier that its product was not made by a PFE, or stating the costs that were not.

A certification must include the supplier's tax identification number, be signed under penalty of perjury, be kept for at least six years and come from the supplier the taxpayer bought from. It cannot be relied on if the taxpayer knows or has reason to know it is wrong, and a product the taxpayer knows was made by a PFE counts as PFE-made in full.² An ownership trace with sources is one way to have reason to know.

Products bought under a binding written contract signed before June 16, 2025 can be left out of the ratio, if the project began construction before August 1, 2025 and is placed in service before 2030.²