A group of power producers, contractors and financial investors in solar and wind power and battery storage criticized the European Commission for the halt of public funding for projects using inverters from high-risk countries. The firms warned of a disproportionate blow to the energy transition in Central and Eastern Europe. The measure mostly affects devices from China, which dominate the market in the European Union.
Restrictions based on the country of origin don’t make devices more secure, as opposed to strict, technology-neutral cybersecurity measures, Central and Eastern European Clean Energy Industry Alliance told the European Commission in a letter. In a reaction to the executive body’s internal guidance for the European Union’s financial institutions and funds regarding inverters, the 36 companies said the move wasn’t transparent and demanded legal certainty and predictability.
The funding ban came into force on May 1. It affects “high-risk vendors,” in a cybersecurity sense, from China, Russia, Iran and North Korea. In particular, China is the only relevant source of inverters and, in fact, dominant in the EU, with up to a 70% share.
The signatories are independent power producers (IPPs), contractors for engineering, procurement and construction (EPC), project developers and financial investors in solar, wind and battery energy storage systems (BESS). They are active in the energy infrastructure segment in Bulgaria, Romania, Poland, Hungary, Czechia, Slovakia, Croatia, the Baltic states and Ukraine.
Components for inverters coming mostly from abroad anyway
Semiconductors, passive components and magnetic materials for inverters for projects in the EU remain concentrated abroad anyway, the letter notes. It highlights the concern about a disproportionate adverse impact the guidance would have on energy security and independence in CEE, especially in times of heightened geopolitical tensions.
The shortage would be the most pronounced in the BESS sphere, requiring containerised power conversion systems (PCS), as well as in the solar string inverters market
The region is expected to add 20 GW to 25 GW of clean energy capacity and 30 GWh of BESS per annum over the coming years, the group added. While expressing support for efforts to bolster cybersecurity in critical infrastructure, it warned that the new setting risks slowing and, in some markets in CEE, halting the energy transition.
EU inverter manufacturing capacity is estimated at 82 GW per year, compared to the necessary 120 GW, the companies said. The shortage would be the most pronounced in the BESS sphere, requiring containerised power conversion systems (PCS), as well as in the solar string inverters market, they underscored.
CEE depends on EU-backed financing
Bankability of clean energy projects in CEE rests heavily on EU grant co-financing, guarantees, concessional lending and blended finance, the alliance said. “Programmes such as the Modernisation Fund, the Recovery and Resilience Facility, Cohesion Policy funds, InvestEU and the Just Transition Fund are not marginal sources of capital for us. They are, in many cases, the determining factor,” it stressed.
The firms said the European Investment Bank (EIB), European Investment Fund, the European Bank for Reconstruction and Development (EBRD) and other financial institutions have an equally critical role.
Alliance calls for subsidies for domestic inverter manufacturers, protection for advanced projects
Any transition period must imply dedicated EU funding and incentives to scale European inverter and PCS manufacturing capacity, the alliance added. It also demanded protection for already advanced projects, to avoid retroactive disruptions.
Among the signatories are R.Power, CWP Europe, Econergy, Enery Development, Eurohold Bulgaria, European Energy, Eurowind Energy, Qair International, RP Global, Renalfa IPP, Renalfa Power Clusters, Rezolv Energy, Sunotec Group, Taaleri Energia and Solarpro Holding.
ESMC is comfortable with available supply
Conversely, the European Solar Manufacturing Council (ESMC) said two weeks ago that the domestic and inverter manufacturers in the Americas and Asia-Pacific excluding China have sufficient capacity for the EU market. It cited data from S&P Global Energy.
Companies are ready to scale within months, the trade body claimed.
