Safer grids, higher bills? - China's ban on EU solar inverters reshapes renewable energy
Solar systems generate 13.4 percent of the EU's electricity and are a cornerstone of the European energy grid. Solar inverters are the brains behind these systems, converting the direct current generated by the panels into alternating current used by homes and businesses.
Even though 61% of solar inverters imported into the EU come directly from China, the European Commission is now banning financial institutions such as the European Investment Bank (EIB) and the European Bank for Reconstruction and Development from financing projects that use Chinese components. The measure applies only to projects under development and future installations, and stems from concerns about national security and cybersecurity.
According to analysts, today’s inverters are connected to the internet so that the manufacturer can perform software updates and perform maintenance. This means you have to trust that the inverter manufacturer won’t make malicious software updates that cause the inverter to crash the power grid. With Chinese inverters, you also have to trust the Chinese government, which can instruct any Chinese company to follow its orders. In this way, China can indirectly control hundreds of gigawatts of inverter capacity, which essentially means it can control the European power grid.
Clean energy developers are scrambling to rewrite procurement contracts. The funding freeze takes effect immediately, so projects using EU funding must stop procurement and replace Chinese equipment.
Deadlines are being pushed back by six to twelve months as developers wait for European-made inverters. With around 20 percent of EU solar installations receiving EIB support, hundreds of projects are affected. Among them is Spain’s Solaria Services Portfolio, a €1.7 billion program to build 100 solar power plants across Spain, Italy and Portugal.
The ban is expected to increase procurement costs by about 2 percent, as European and allied alternatives are more expensive and production capacity cannot be expanded overnight. Developers must now source equipment from European manufacturers or trusted partners such as Japan and the United States.
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