EU Bans Public Bank Financing for Solar Projects Using Chinese Inverters, Citing Cybersecurity Risks

The European Commission has banned the European Investment Bank and the European Bank for Reconstruction and Development from financing solar projects that use Chinese components. The measure takes immediate effect and applies only to projects still in development. 4 percent of EU electricity.

Inverters convert direct current from panels into alternating current for homes and businesses. Euronews reported that 61 percent of solar inverters imported into the EU come directly from China and that 80 percent of all newly installed solar power systems across the EU rely on Chinese-made inverters.

Christoph Podewils, Secretary General of the European Solar Manufacturing Company, said: “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. With Chinese inverters, one must also trust the Chinese government, which can instruct any Chinese company to follow its orders. ” Podewils cited a cybersecurity study by the Czech Technical University in Prague.

The study 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. Projects using EU financing must halt procurement and replace Chinese hardware.

Timelines are being pushed back by six to twelve months as developers wait for European-made inverters. Roughly 20 percent of EU solar installations receive EIB support, so hundreds of projects are affected. 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.

Companies will also need suppliers to certify that internal components, including circuit boards and semiconductors, are not sourced from China.

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. ” The ban is expected to raise procurement costs by around 2 percent.

Chinese manufacturers can typically offer products 20 to 30 percent cheaper than European competitors. China controls about 98 percent of the solar and battery component supply chain. 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. ” The anticipated reduction in consumer energy bills is likely to arrive later than expected under the EU Solar Energy Strategy, which projected relief in 2025-26 and a 4 to 25 percent decline in wholesale electricity prices by 2030.

Between 2027 and 2030, European manufacturers are expected to scale up local production under the Net-Zero Industry Act.