Solar is the fastest-growing energy technology ever. Its meteoric rise from generating less than 0.2% of global electricity in 2000 to 5.5% in 2023, according to the International Energy Agency’s (IEA) World Energy Outlook, continues to gather momentum. In 2022, the world added more solar capacity than all other electricity sources combined, reports the International Energy Forum (IEF). By 2024, 593 GW of solar capacity was installed – 29% more than in 2023 – surpassing most industry forecasts, says Ember.

Huge leaps in PV panel efficiency – from 6% in the 1950s to 24.5% today – have driven this progress, according to the IEF. Alongside that is a reported 83% drop in installation costs per Watt, from $5.12 in 2010 to $0.88 in 2022. Since 2020, solar has been the cheapest source of electricity generation worldwide, according to the IEA.

China undoubtedly leads in the solar space. Government policies and individual entrepreneurship have helped Beijing to control over 80% of global capacity across all solar manufacturing stages, such as polysilicon, ingots, wafers, cells and modules today. This figure rises to 90% if capacity in south-east Asia owned by Chinese corporations is included, notes the IEA. China’s expertise in mass manufacturing and technological innovation has also driven down global prices.

This dominance threatens European economic competitiveness, energy security, and even climate goals. The EU and US previously imposed tariffs to protect domestic solar manufacturers from cheap Chinese imports. But Chinese firms have proved adept at circumnavigating tariffs, for example by relocating some downstream capacity to south-east Asia.

In 2018, when the EU lifted trade protections, Europe became the largest open market for cheap Chinese solar imports. Installations subsequently soared, but many European manufacturers suffered layoffs, bankruptcies and relocations. Some moved to the US, attracted by the Inflation Reduction Act’s (IRA) generous subsidies under President Biden and stronger trade barriers than at home. But President Trump blocked these subsidies on his first day in office and his administration has blocked all renewable development on federally-owned lands. He may also raise tariffs with China.

If China loses the US as a solar market, the EU could face a flood of surplus low-cost Chinese solar products again. Whilst this could accelerate the energy transition in the EU and elsewhere outside the US, it may spell the end of what remains of the EU’s solar manufacturing sector.

Europe’s solar boom 
Solar energy was the fastest-growing power source in the EU in 2024, with installations in every member state. Solar generation overtook coal for the first time, reaching 11% (304 TWh) of EU electricity, surpassing the dirtiest fossil fuel’s 10% (269 TWh), according to a 2025 Ember report.

The European Green Deal (launched in December 2019) helped drive Europe’s solar installations boom. This year, the European Commission will release the Clean Industrial Deal, a multi-year plan to boost both the EU’s traditional energy-intensive industries and emerging clean technology sectors. Its key themes are enhancing energy security, reducing energy prices, financing the transition, recycling and critical raw materials, labour and skills, lead markets, and global action.

Experts predict that this deal will aim to help the bloc foster its domestic solar industry and reduce dependency on China whilst maintaining momentum in solar installations. It could work much like the 2022 REPowerEU policy package, which aimed at cutting Europe’s reliance on Russian gas, successfully reducing Russia’s share of EU gas imports from 45% in 2021 to 15% in 2023. However, unlike gas, which has many alternative providers, the EU will need to find new sources of raw materials and develop domestic manufacturing to enhance solar energy security.

Despite the urgency to diversify solar supply chains, competing with China’s cost-competitive manufacturing of solar PV remains an uphill battle. Chinese manufacturing costs for all components of the solar PV supply chain are 10% lower than in India, 20% lower than in the US, and 35% lower than in Europe, according to the IEA. Much of this is due to cheaper energy, labour, overhead costs and more available investment. Given Europe’s financial constraints, it cannot compete on price alone.

The EU’s strategy to counter China’s hegemony 
Considering China’s overwhelming dominance of the global solar supply chain, the EU’s urgent climate goals, and the globalised economy in which the EU is deeply enmeshed, a complete economic decoupling with China would be virtually impossible. Instead, European policymakers are adopting a strategic, non-confrontational approach known as ‘de-risking’.

This aims to carefully manage the risks coming from economic and technological engagement with China whilst maintaining key trade links. It avoids a broad decoupling from China, opting instead to focus on reducing specific dependencies. This involves diversifying the EU’s economic connections and building its own capacities. However, progress is complicated by the sometimes-contradictory perspectives of individual national governments.

Nevertheless, the EU is working on several initiatives to boost domestic solar manufacturing and innovation. These form part of the REPowerEU package. The Solar Energy Strategy is one example. It aims for over 320 GW of newly installed solar PV capacity by 2025, and almost 600 GW by 2030. The strategy includes four initiatives:

• European Solar Rooftops Initiative
• EU large-scale skills partnership for renewable energy
• European Solar PV Industry Alliance
• EC’s permitting package

Not only do these initiatives ensure the accelerated installation of solar panels on buildings, but they also help create a workforce with the skills necessary to produce, install and maintain solar panels, and support the EU industry in expanding the domestic production of PV. For example, the European Solar PV Industry Alliance alone aims to accelerate Europe’s solar PV deployment by increasing manufacturing capacity to 30 GW annually by the end of this year, adding €60bn of new GDP every year in Europe and creating more than 400,000 new jobs, direct and indirect.

In March 2023, the EU also adopted the final Critical Raw Materials Act. The act aims to ensure that by 2030 the bloc does not rely on any single country for more than 65% of its supply of any strategic raw material. It targets securing the materials needed for solar panels, electric vehicle batteries and other green energy technologies. This means building capacity by 2030 to meet at least 10% of annual needs for extraction; 40% for processing and 25% for recycling. Associated legislation also intends to boost recycling capacity to collect, sort and process 45% of the strategic materials in its waste for recycling.

Innovation: another avenue for Europe 
Besides EU-wide policies, European companies are also developing the solar industry in new directions through innovation. One notable trend is balcony solar panels. Whilst they are far less powerful than rooftop PV panels, balcony panels are cheaper and much easier to install. These plug-and-play panels simply connect into power sockets. By October 2024, Germany had doubled its number of plug-in solar systems that year. More than 800,000 kits had been installed in Germany alone by the end of 2024, but the true figure is estimated at closer to three million.

Sonnenrepublik, a major producer of balcony and other solar panels, manufactures its solar components in Germany. However, its website admits ‘our Powerbanks are completely produced in China, otherwise we would not be competitive any more’. 

• Further reading: ‘European solar PV market – Chinese imports continue to dominate’. Solar PV power has been a star performer in Europe in recent years, but imports of panels from China, together with local market and price issues, mean the growth picture is complicated. Rajan Kalsotra and Saif Islam, Senior Consultants with the Bonn-based energy market researcher and consultant EUPD Research, predict a year of mixed progress for 2025.
• The clock is ticking on climate change, and large-scale solar projects are taking a central role in the race to decarbonise our energy systems. Tarun Agrawal, CEO of AMPYR Solar Europe, explores how businesses are benefitting.