EU-made solar modules cost €0.103/W more than Chinese equivalents, mainly due to higher equipment and labor
Urgent policies and support, including CapEx, OpEx, and output-based incentives, can shrink the EU-China cost gap
EU solar expansion to 30 GW will require financial support of €1.4 billion to €5.2 billion annually, but it will create jobs, recover costs, and boost economic benefits
A new report from SolarPower Europe (SPE) and Fraunhofer ISE outlines how Europe can reshore solar module manufacturing under the EU’s Net-Zero Industry Act (NZIA) by shrinking the cost gap between EU-made and Chinese solar modules to under 10% with urgent policies. The study cautions that delayed action risks weakening Europe’s solar manufacturing sector.
Manufacturing Capacity
NZIA was brought in to enable 30 GW of annual solar PV manufacturing capacity in Europe by 2030, up from under 10 GW/annum that the region currently operates across cells, wafers and modules, claims the report titled Reshoring Solar Manufacturing to Europe. Operational capacity here stands at 9 GW for polysilicon, 2.9 GW for solar cells, and 6.7 GW for modules. There is an idle capacity of 1.9 GW for cells and 5.5 GW for modules at present, while 4.7 GW of module production and 0.4 GW of ingot capacity were shut down in 2024.
The future should be better, as announced manufacturing capacities so far for ingots and wafers stand at 10 GW each, 22.2 GW for solar cells, and 32.5 GW for modules. By 2030, the cumulative operational capacity of the EU across the value chain can reach up to 9 GW for polysilicon, 10 GW each for ingots and wafers, 27 GW for cells, and 44.6 GW for modules, according to the report writers.
Cost Gap
Yet, the current economics don’t work out well for the continent’s solar PV manufacturing industry. Currently, a solar module produced in the EU with locally made cells costs around €0.103/W more than the same module produced in China. The gap is owing to 40% higher equipment costs, 110% higher building and facility costs, and 50% more material costs.
These factors lead to a 14.5% higher levelized cost of electricity (LCOE) for EU-made modules, yet it is under the 15% extra cost limit allowed under the EU’s NZIA rules.
The EU passed the NZIA in 2024 and updated it with detailed rules in May 2025 related to incorporating non-price criteria (NPC) into renewable energy auctions by Member States, starting from 2026. Member nations must apply these criteria to support at least 30% auctioned volume or 6 GW annually (see EU Rolls Out NZIA Rules for Sustainability in Auctions).
Nevertheless, the report writers share that the EU-made NZIA-compliant modules are still €0.022 to €0.058 /W costlier than NZIA-compliant non-EU-made modules. They caution that despite NZIA’s resilience criteria, stronger and more policy measures are needed, or else this could lead to more imports from other countries.
Recommendations
The EU needs to expand its solar PV manufacturing capacity across the board, recommend the report writers, to cater to the growing demand from a market estimated to grow between 60 GW and 104 GW annually. SPE expects the bloc to install 64.2 GW capacity in 2025 (see SolarPower Europe: European Union To Install 64.2 GW PV In 2025).
Since China supplies 81% to 93% of PV components to Europe, most of this demand will likely be supplied by Chinese imports.
Policies such as combining CapEx and OpEx schemes for both manufacturers and project developers, along with output-based support on the lines of the US’ Inflation Reduction Act (IRA) and India’s Production Linked Incentive (PLI) schemes, can help bring down this cost gap between EU-made and China-made modules. This assumes solar factories reaching a capacity of 3 GW to 5 GW, according to the analysis performed by Fraunhofer ISE, National Renewable Energy Laboratory (NEL), and RCT Solutions (see EU Solar Industry Calls For Immediate Manufacturing Support).
To bridge the gap, the EU will need financial support of €1.4 billion to €5.2 billion annually to reach the 30 GW target, with up to 39% of costs being recovered through macroeconomic benefits. Presenting various scenarios for the financial support required, the analysts break it down as follows:
€172.6 million per year per GW (or €5.2 billion per year for 30 GW) if the entire solar supply chain is made in the EU.
€45.3 million per year per GW (or €1.4 billion per year for 30 GW) if the supply chain only meets NZIA rules and uses no EU-made parts.
About 28–39% of the upfront costs can be recovered through wider economic benefits, which are highest when the supply chain is fully in the EU.
This means that while making more of the solar supply chain in the EU may cost more initially, it will bring bigger economic benefits later. For each GW/annum of EU PV manufacturing capacity, expect the creation of up to 2,700 new jobs, and €12.6 million to €66.4 million in annual tax and social revenues.
Additionally, implementing NZIA policy schemes across Member States, including Made-in-EU bonus points in rooftop support and public procurement programs, is needed.
“This new report underlines that, with the right policies, Europe can competitively deliver 30 GW of solar manufacturing by 2030, creating thousands of local jobs, and building a resilient, innovative solar supply chain that keeps economic value here at home. To meet 2030 goal, the EU and Member States must act swiftly,” said SPE CEO Walburga Hemetsberger.
The complete report is available for free download on SPE’s website.