EU Financing Exclusion for High-Risk Country Inverters: S&P Global Data Show Sufficient Capacity among Western Manufacturers

Brussels – The planned exclusion of inverters from high-risk countries from EU financing instruments has put the question of supply security in the European solar market into focus. The European Solar Manufacturing Council (ESMC) points to market data from S&P Global Energy, which it says show that Western manufacturers can already meet demand today.

In addition to China, the EU Commission classifies Russia, Iran and North Korea as high-risk countries. The measure primarily affects Chinese manufacturers such as Huawei and Sungrow, which according to EU figures supply a large share of the inverters installed in Europe. ESMC also describes manufacturers from countries such as Israel or the Asia-Pacific region as "Western," even though they are not geographically part of the "West" – the term is not clearly defined in the announcement. The Commission decided on the exclusion from EU financing instruments such as the EIB and EIF in April 2026; a final decision on how to treat existing projects already underway is due by November 1, 2026. The rule is intended to prevent circumvention through relocated production or subsidiaries in third countries, and is also meant to apply to EU-funded projects in neighboring regions such as North Africa or the Western Balkans, provided they are connected to the European grid.

Supply versus Demand

A central question is whether enough non-Chinese-made inverters are available. ESMC disputes that there is a supply gap, citing an analysis by S&P Global Energy. According to the analysis, European production capacity stands at around 104 GWac, with more than a further 120 GWac available from the Americas and the Asia-Pacific region excluding China. More than 53 GWac is said to be available for European demand alone – close to the solar capacity installed in the EU in 2025. "The supply is not the bottleneck. The capacity to replace high-risk suppliers already exists today," said Christoph Podewils, Secretary General of ESMC.

Moderate Additional Costs

An analysis by Wood Mackenzie cited by ESMC found that using a Western inverter instead of one from a high-risk country raises the cost of a commercial or ground-mounted project by around 2 percent, and by 3 to 4 percent for string inverters in residential buildings; for systems using micro-inverters, power optimizers or hybrid inverters, the increase can reach up to 8 percent. Eastern European markets are said to be priced at similar levels to Germany or Spain, meaning there is no structural cost disadvantage.

Market Presence in Eastern Europe

According to the association, Western inverter manufacturers have long maintained their own sales and service structures in many European countries. An ESMC survey of six companies covering eight countries in Eastern Europe found an installed capacity of around 14 gigawatts and around 330 sales and service staff working on-site or remotely, in some cases since around 2010; according to the survey, sales and service operations could be scaled up within around six months. Poland has the strongest presence, with 4,430 megawatts of installed capacity and around 74 employees, where expansion is said to be possible within three months. It is followed by Hungary (1,831 MW), the Czech Republic (1,468 MW), Romania (1,147 MW), Bulgaria (810 MW) and Slovakia (364 MW). The association notes that the survey covers only six companies and that the actual presence of Western suppliers in the region is likely higher. "The inverter is the brain of every solar system. Whoever controls the brain controls the grid. The debate over whether Europe can free itself from suppliers in high-risk countries is over – the capacity exists, the manufacturers exist, and in Eastern Europe they have existed for fifteen years," Podewils said.

About ESMC

The European Solar Manufacturing Council (ESMC), based in Brussels, represents companies and organizations in the European photovoltaic manufacturing industry, including inverter manufacturers. It advocates at the European level for strengthening the PV value chain in Europe and regularly publishes market assessments on the role of European and Western manufacturers.

Source: IWR Online, 08 Jul 2026