A new Loom report says that Europe continues to highly depend on Chinese solar panels, batteries, and inverters
This dependence creates economic, geopolitical, and defense-related risks while weakening local manufacturing
Large-scale cyberattacks are unlikely, says the report, but smaller disruptions and vulnerabilities are a concern
A lack of coordinated strategy and delay in strengthening local industries may force Europe to act under external pressure, possibly from the US
A new report by ‘pop-up’ strategy center Loom finds that Europe remains ‘dangerously dependent’ on Chinese low-carbon technologies. At Europe’s end, there has been little progress in shifting supply chains as policy efforts to ‘de-risk’ have not really translated into a material shift in the geography of clean-tech manufacturing at scale.
In 2024, China supplied 98% of Europe’s solar panels (up from 68% a decade ago), 88% of lithium-ion batteries for electric vehicles (EVs) (up from 75% in 2019), and 61% of inverters (up from 45% in 2018).
The report notes that while such imports can help stabilize energy costs compared to fossil fuels, they also create long-term industrial, technological, and geopolitical vulnerabilities that remain widely underestimated.
While Chinese solar module imports have increased owing to rapid scale-up and cost reductions, they have ‘decimated’ the European industry with the decline of European manufacturers and job losses (see Europe’s ‘Last’ Solar Glass Manufacturer Files For Insolvency). Today, China controls over 80% of the global solar value chain while Europe retains a small, specialized manufacturing base.
“It is highly unlikely that Europe will resuscitate its solar industry. Non-Chinese panels are three times more expensive and often still contain Chinese components. But innovation in Europe can and should be protected especially for next generation technologies. Creative industrial policies can help scale up,” reads the report.
It also reflects on concerns regarding China’s dominance in low-carbon technology, leading to the risk of cyberattacks that could disrupt energy and transport systems. There is a fear that Chinese cyber actors could use hidden access points in technologies like solar panels, wind turbines, EVs, or power grids to disable them remotely, though these claims warrant closer examination.
Europe is also highly reliant on China-made solar inverters, which may be vulnerable to exploitation, the report points out. The European Commission has reportedly approved a plan to stop the bloc from funding projects that deploy Chinese solar inverters (see Solar Trade In Focus As China & EU Weigh New Curbs).
A recent Euronews report says that the European Commission has identified serious economic and cybersecurity threats in China-made inverters based on classified and publicly available information submitted by several member states. An EU official reportedly said that in the worst-case scenario, it could undermine the European energy infrastructure, potentially triggering blackouts. Therefore, the commission will gradually eliminate the use of Chinese-made inverters in EU-funded energy projects.
Loom analysts agree that China likely has the technical capability to access and potentially disrupt systems using Chinese-made or operated smart technologies, especially given its cyber expertise and legal requirements that compel companies to cooperate with state authorities. If such an attack occurred, it could cause major damage, including blackouts and transport disruption, and weaken public trust in energy systems.
However, they argue that a large-scale attack is unlikely outside of a major conflict, as it would risk serious retaliation and escalation. It also notes that cyber vulnerabilities are not limited to Chinese technology alone. Any connected infrastructure can be targeted by capable actors, says the report, regardless of origin, while referring to Russia’s cyberattack on the Ukrainian power grid or the US controlling the Venezuelan power grid during the extraction of Nicolás Maduro.
Moreover, much so-called ‘non-Chinese’ technology still depends on Chinese components or manufacturing, making complete separation difficult, notes Loom.
It also highlights that only internet-connected ‘smart’ systems are vulnerable, while non-connected equipment such as solar panels or cables carries no cyber risk. Overall, while the risk of major disruption is low, smaller-scale cyberattacks are considered more likely and could still cause meaningful damage and signal strategic intent.
The report also highlights risks to Europe’s defense and technology sectors, noting that critical inputs like batteries and rare earth materials – largely controlled by China – are essential for both clean energy and military systems.
At present, Europe lacks a coordinated strategy to manage these risks, as policies have focused more on emissions and low costs than on geopolitical changes. If Europe does not reduce its dependence on China by building its own industries, it may later be forced to act under US pressure instead of on its own terms.
Potential pressure from the US to restrict Chinese technology – warning of economic or security consequences – could further complicate Europe’s position.
Overall, the report writers believe that continued reliance on China could weaken European industries, expand trade deficits, and increase external influence over pricing and supply chains. They warn that sectors such as automotive and wind manufacturing may face similar pressures to those that affected Europe’s solar industry.
Without a coordinated industrial strategy, the report concludes, Europe may struggle to balance decarbonization goals with economic security and could ultimately be forced to reduce dependency under external pressure rather than through its own policy framework.
The complete report titled Dependence The National Security Risks of China’s Role in Europe’s Energy Transition is available for free download on Loom’s website.