Cybersecurity and clean energy: Inside the EU funding ban for solar and storage inverters

**Eklavya Gupte** (0:01)
Welcome to Energy Evolution, a podcast where we examine the forces shaping how we power, fuel and electrify our future.
I'm your host, Eklavya Gupte, and in this episode, we're exploring a fundamental question. What happens when energy security policy collides with the reality of supply chains?
We will be looking specifically how an EU funding ban for photovoltaic or solar inverters and energy storage power conversion systems from so-called high-risk suppliers could shake up Europe's solar and storage supply chains. In April, 2026, the European Commission adopted interim policy guidance stating that clean energy projects seeking EU financial support could no longer use inverters or battery converters from so-called high-risk suppliers. According to the guidelines, the requirements apply to projects submitted by financial institutions from 1st November, 2026 for projects set to be connected to the grid. For those not to be connected to the EU grid, the requirements apply from 15th April, 2027 Now, this decision primarily targets Chinese manufacturers who currently supply a lion's share of both solar and battery storage converters used in Europe. A spokesperson from the European Commission told Energy Evolution that the guidance was to better align EU funding with the EU's economic security objectives, as announced in the December 2025 Joint Communication on Strengthening Economic Security. Now, this is a move that touches upon cyber security, industrial resilience, geopolitics, and the very pace of Europe's energy transition. And it's raising some fundamental questions. Can Europe actually source these critical components elsewhere? What will it cost? Will this slow solar development? Just when momentum is building? And perhaps more importantly, is this the beginning of a broader global trend towards supply chain diversification in clean energy?
Now, as it turns out, in late July, the US also followed suit, imposing an immediate ban on foreign-produced inverters, citing supply chain vulnerabilities and cyber security risks. Now, to help us understand what this means for the industry, I'm joined by my colleague, Lena Dias Martins, who's been tracking this story closely. Lena, welcome to the Energy Evolution Podcast.

**Lena Dias Martins** (3:03)
Thank you, Eklavya. It's great to be here.

**Eklavya Gupte** (3:05)
So, Lena, can you start by explaining what has happened and why has it caused such a stir?

**Lena Dias Martins** (3:11)
Yeah, absolutely. So, as you've already touched upon, in April this year, the European Commission informed funding bodies that renewable projects that were using photovoltaic or PV inverters or energy storage power conversion systems from so-called high-risk suppliers would no longer be able to receive EU funding. So, alongside China in this bracket of high-risk suppliers is Russia, Iran, North Korea, but they don't supply PV inverters or power conversion systems to Europe. So, the focus is really on China, which is the dominant supplier to Europe.
Now, to give a bit of context and to explain what the technology is, inverters are essentially a device that converts direct current electricity, for example, from solar modules or battery assets, into alternating current that then can be fed into national electricity grids. It's this connection to the national grids which puts inverters under a particular focus or spotlight.

**Eklavya Gupte** (4:05)
Right. Makes sense. As we know, this isn't quite happening in isolation. There are parallel efforts, especially like updates to the EU Cybersecurity Act.
So this funding restriction might be a way to act more quickly, while those broader frameworks are still being developed.

**Lena Dias Martins** (4:23)
Exactly.
I spoke to Cormac Gilligan, who is the Director of Clean Technologies and Supply Chains at S&P Global Horizons to learn more. So perhaps we can hear a bit about what Cormac has to say.

**Cormac Gilligan** (4:35)
So at the moment, the primary aim has been around the topic of cybersecurity and protecting the grid. And so I'll take one step back and say that there are other initiatives happening in parallel. So for example, there is the Cybersecurity Act and there's an update that has been worked on, Cybersecurity Act 2 And this was proposed in January of 2026, but it's likely this won't be effective until sometime in 2028
So they're obviously considering different avenues to look at ways of dealing with concerns around cybersecurity. And this may be one of the reasons why this has been announced recently. I would say additionally, there are maybe some secondary aims at play here.
And these are very well known across other industries, not just in the renewables or clean technology space. But these can relate to topics such as perception of unfair competition or trying to level the playing field with countries that maybe are giving better supports to certain industries and to allow European companies to compete more effectively. Of course, one of the big aims is to have a robust and healthy manufacturing capacity within Europe. So this could be classified as manufacturing resilience. And so it's not too much over dependence on maybe one country supplying a large amount of components to one type of industry, in this case, maybe renewables.