The European Commission has moved to bar financial institutions such as the European Investment Bank (EIB) and the European Bank for Reconstruction and Development from funding solar and battery storage projects that rely on inverters manufactured in China. The decision, rooted in national security and cybersecurity concerns, applies only to new and future installations, leaving existing projects unaffected.
Solar inverters are the critical components that convert the direct current produced by photovoltaic panels into the alternating current used by homes and businesses. With solar power accounting for 13.4 percent of EU electricity and growing rapidly, the bloc is increasingly dependent on these devices. Currently, 61 percent of solar inverters imported into the EU come from China, and an estimated 80 percent of newly installed solar systems across the Union rely on Chinese-made inverters.
Cybersecurity fears drive the ban
Christoph Podewils, Secretary General of the European Solar Manufacturing Company, an industry association, warned that internet-connected inverters could be exploited for malicious purposes. “Today’s inverters are connected to the internet so that the manufacturer can carry out software updates and perform maintenance. This means you have to trust that the inverter manufacturer will not carry out malicious software updates that force the inverter to damage the electricity grid,” he said. “With Chinese inverters, one must also trust the Chinese government, which can instruct any Chinese company to follow its orders. In this way, China could indirectly control hundreds of gigawatts of inverter capacity, which essentially means it could control the European power grid.”
Podewils pointed to a cybersecurity study by the Czech Technical University in Prague, which found that Chinese-affiliated researchers have spent years studying foreign power grids, including research into cascading failures, false data injection attacks, and methods for identifying critical nodes whose disruption could trigger large-scale outages. The study argues that distributed energy resources such as solar systems and batteries increasingly appear in this research as both grid assets and potential attack surfaces.
The sector is split on the implications. Clean-energy developers are scrambling to rewrite procurement contracts, as the funding freeze takes immediate effect. Projects using EU financing must halt procurement and replace Chinese hardware, pushing timelines back by six to twelve months while they wait for European-made inverters. With roughly 20 percent of EU solar installations receiving EIB support, hundreds of projects are affected, including Spain’s Solaria Utility Portfolio, a €1.7 billion programme to build 100 solar plants across Spain, Italy and Portugal.
Developers must now source equipment from European manufacturers or trusted partners such as Japan and the United States. Key suppliers include Germany’s SMA Solar Technology, Austria’s Fronius International, Italy’s Fimer, and the Netherlands’ Victron Energy, though the rapid transition is creating logistical bottlenecks. Jürgen Reinert, CEO of SMA, told Euronews: “The decision may add some complexity for project developers relying on EU investments. Developers will need to review supplier choices more carefully and reassess certain project assumptions. At the same time, we see a broader shift: beyond cost and performance, factors such as system security, transparency and regulatory compliance are becoming more important in procurement decisions.”
Companies will also need suppliers to certify that internal components, including circuit boards and semiconductors, are not sourced from China. Customs checks are expected to create additional administrative delays. The ban is expected to raise procurement costs by around 2 percent, as European and allied alternatives are pricier, and manufacturing capacity cannot expand overnight. Chinese manufacturers benefit from highly automated production and can typically offer products 20 to 30 percent cheaper than European competitors. China also controls about 98 percent of the solar and battery component supply chain, meaning European firms still rely on Asian inputs, increasing transport and intermediary costs.
Impact on consumers and renewable rollout
Developers are expected to absorb higher manufacturing costs, project delays, and supply-chain restructuring. Over time, some of these costs may be passed on to consumers, resulting in modest increases in electricity prices. David Greau, secretary general of French energy syndicate Enerplan, told Euronews: “Costs may increase a bit. But the long-term challenge is the resilience of our supply chains. The reindustrialisation of the entire value chain, from solar panels to inverters, is part of this effort. We need a strong European industry.”
The decision will also affect the rollout of renewable energy. As major projects replace Chinese hardware, the addition of new low-cost renewable power to the grid will slow temporarily. “It’s necessary to ensure that timelines are aligned, imposing Made in Europe requirements when the industry is able to deliver,” Greau added. “With economies of scale, European products should become competitive, even if additional support is needed during the ramp-up phase. The entire sector will benefit in the long term.”
The anticipated reduction in consumer energy bills is likely to arrive later than expected under the EU’s renewable energy targets. The move comes amid broader EU efforts to reduce dependence on Chinese technology, including capping Chinese parts in manufacturing supply chains. While the ban aims to safeguard grid security, it also risks slowing the energy transition and raising costs for European households and businesses.
