EU moves to ban high-risk inverters from China

The European Commission will gradually eliminate the use of Chinese-made inverters in EU-funded energy projects, a major step aimed at protecting critical energy infrastructure from possible cyber threats that could trigger power outages.

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The move follows warnings from analysts that Europe’s heavy reliance on Chinese-made solar inverters — produced by firms like Huawei and Sungrow — could pose risks to Europe’s power grid stability, especially as Europe relies more on renewable energy such as solar and wind.

“We have identified serious economic and cybersecurity risks,” an EU official speaking on condition of anonymity told reporters on Monday, noting that the Commission’s assessment drew on both classified and non-classified evidence provided by multiple member states.

The findings indicated that certain countries could, in a worst-case scenario, undermine European energy infrastructure, potentially even triggering blackouts, the EU official said, referring to China, Iran, North Korea and Russia.

Inverters are a relatively small but crucial component in modern energy systems. Often described as the “brain” of electricity networks, they play a critical role in converting and regulating the flow of power from renewable sources such as wind and solar, as well as storage systems.

Inverters’ central role in the EU’s energy transition has raised concerns about vulnerabilities if supplied by companies linked to governments considered hostile to EU interests.

Last November, 30 MEPs with an energy background asked the Commission to prevent “risky” technology providers from gaining access to European infrastructure.

Economic security rather than industrial policy

The EU announcement is explicitly framed as an economic security measure rather than an industrial policy, meaning companies from trusted partners such as Japan and South Korea will remain eligible for EU-funded projects, the EU official said.

The Commission also hopes the initiative will have a broader ripple effect, encouraging EU countries and international partners to adopt similar approaches. Lithuania has already taken steps to impose restrictions on high-risk energy technologies.

The decision follows up on a policy first outlined in December 2025, when the EU executive signalled it would leverage EU funding rules to reduce dependencies on suppliers deemed a security risk.

With Europe accelerating its transition to renewable energy, the Commission’s intervention underscores a growing focus on ensuring that the technologies underpinning that transition are not only sustainable but also secure.

No EU funding for high-risk suppliers

The new guidance applies broadly across all EU funding instruments — both direct and indirect — including financing from the European Investment Bank and the European Bank for Reconstruction and Development.

Rather than introducing new legislation, the Commission will enforce the restrictions through existing tools, including project-level policy checks and provisions under the EU’s financial regulation that allow security-based conditions to be imposed on funding.

Under the rules, all EU-funded projects must now comply with updated cybersecurity requirements. A transitional period will run over the coming months for projects already at an advanced stage.

By 1 November 2026, such projects will be assessed under the previous framework but may be required to adopt additional cybersecurity measures or exclude high-risk suppliers, the Commission said.

A stricter phase-in will follow from April 2027, when new contracts and agreements will fully incorporate the restrictions, although limited derogations may be granted on political or security grounds, according to the EU official.

The Commission has set out an ambitious implementation timeline. By 1 July 2026, all its services must review ongoing activities and propose how to integrate the new restrictions. A further assessment, due by 15 July, will evaluate whether alternative suppliers can meet demand and ensure sufficient production capacity.

On Monday, the China Chamber of Commerce to the EU (CCCEU) rejected the EU’s claims of potential energy weaponisation from Beijing, saying that Chinese companies have long contributed to the bloc’s energy transition “through reliable, competitive, and widely deployed inverter and grid technologies.

“We hope the EU will uphold the principles of technology neutrality and non-discrimination, avoid introducing non-market barriers into green finance and infrastructure cooperation, and continue to foster an open, predictable environment that supports global collaboration on the energy transition,” a CCCEU spokesperson told Euronews.

The CCCEU spokesperson suggested that framing inverters in geopolitical terms risks over-securitising normal commercial technologies and could undermine fair competition, investor confidence, and the stable functioning of global supply chains in the clean energy sector.

Alternative suppliers

Despite concerns over supply disruptions, officials expressed confidence that the market can adjust. While Chinese manufacturers currently dominate the global inverter market with an estimated 80% share, the Commission considers that sufficient alternative supply capacity exists among producers in countries such as Japan, South Korea, Switzerland, and the United States.

“We have strong signals from industry that they would be able to ramp up capacity quite quickly,” the EU official said.

The expected impact on prices is limited. Inverters account for roughly 5% of the cost of large-scale solar installations, according to the Commission, and switching to non–high-risk suppliers is estimated to increase total project costs by less than 2%.

However, questions remain about existing infrastructure that already relies on equipment from high-risk suppliers. Officials acknowledged the issue but indicated that the current decision is a “first step” to be complemented by additional cybersecurity measures over time.