Elements of Programming Interviews - 16.4 Generate Power Set - solution 1 time complexity question
Note the following line of code:

powerSet.add(new ArrayList&lt;&gt;(SelectedSoFar);


Whenever we create a subset, we add the subset (list) to a list of list : power set. The size of subset will be $n$ (actually it will vary from $1$ to $n$, but we can take it to be $n$).

Even though adding a list requires one line of code, but it will involve copying all the elements. This is why it will take O(n) time.