The EU has taken its most direct step yet to cut Chinese clean energy hardware out of publicly funded projects, banning Chinese inverters from all EU-funded schemes in a move Brussels described as the first in a series of actions targeting high-risk suppliers.<\/p>\n
\u201cWe decided we will take concrete action right now … that has included developing guidance on restricting the use of EU funds for projects involving inverters from high-risk suppliers,\u201d European Commission spokeswoman Siobhan McGarry said on Monday, confirming an exclusive report<\/a> by the South China Morning Post last month.<\/p>\n A European Union official said Brussels had identified four countries as high-risk \u2013 China, Russia, North Korea and Iran \u2013 but only China, which controlled 80 per cent of global supply, had a dominant presence in the European inverter market.<\/p>\n Chinese brands Huawei Technologies and Sungrow ranked as the world\u2019s top two solar-inverter manufacturers in the first half of last year, ahead of Germany\u2019s SMA and Austria\u2019s Fronius, according to a report published by natural resources consultancy Wood Mackenzie in January.<\/p>\n The EU official said Brussels had identified cybersecurity and dependency risks in inverters \u2013 devices that convert renewable power into grid-ready electricity.<\/p>\n Financial institutions had until May 15 to notify the European Commission of ongoing projects \u2013 in or outside the EU \u2013 using Chinese inverters connected to the EU grid. Brussels would then decide on a case-by-case basis by November 1 whether to grant exemptions for projects that were too far along to switch suppliers without disrupting deployment, the official said.<\/p>\n The European Commission did not spell out what Chinese companies could do to get off the blacklist.<\/p>\n The official said Brussels believed there were more than enough non-Chinese suppliers for the sector to absorb the switch, with the additional cost estimated at less than 2 per cent.<\/p>\n \u201cWe have strong signals from industry that they will be able to ramp up capacity fast,\u201d the official said.<\/p>\n Five of the top 10 inverter manufacturers tracked by Wood Mackenzie are non-Chinese, spanning Germany, Austria, Japan, the United States and Israel.<\/p>\n The EU ban is sweeping in its financial, technological and geographical reach.<\/p>\n The official said it covered all EU financial institutions, including the European Investment Bank (EIB) and the European Bank for Reconstruction and Development, as well as \u201ca rather long list\u201d of implementing partners working on energy issues, such as Germany\u2019s KfW Development Bank.<\/p>\n EIB funding covered, directly or indirectly, 20 per cent of installed solar capacity, 30 per cent of onshore wind and the vast majority of offshore wind in the EU last year, the official said.<\/p>\n In terms of technology, the ban extends across all renewable sectors \u2013 solar, wind and storage batteries \u2013 with batteries \u201cexplicitly included\u201d, according to an internal memo seen by the SCMP.<\/p>\n Geographically, it applies to all EU-financed clean energy projects worldwide, with tighter compliance deadlines for those connected to the European grid, including those in the Balkans and North Africa, the memo said.<\/p>\n This will undoubtedly have a profoundly negative spillover effect on Chinese companies<\/p>\n China Chamber of Commerce to the EU<\/p>\n The EU official said it was just the first step in a possible series of actions that could culminate with revisions to the Cybersecurity Act<\/a> that would give the EU the power to bar high-risk suppliers from the market entirely.<\/p>\n The measures\u2019 ever-increasing scope and their potential spillover effects have alarmed Chinese companies in the clean energy sector, with many expressing concern about whether the ban will extend to member states\u2019 commercial banks and private funding.<\/p>\n The fear could be justified. EU officials said the bloc was reaching out to member states to encourage similar approaches and would oppose projects involving high-risk suppliers at \u201ccertain financial institutions\u201d where the European Commission had representations. The commission was also assessing other areas of risk and could take similar decisions for other sectors, they said.<\/p>\n