Italy awarded more than 1.1 gigawatts of solar capacity across 88 projects in December 2025 through its first auction restricted exclusively to projects built without Chinese-manufactured equipment. Winning bids averaged €66.38 ($75.80) per megawatt hour, 17% above the price set in an unrestricted renewable auction held in 2025, according to data from Italy’s electricity services agency, GSE.
Why is Europe paying more for non-Chinese solar panels?
The price hike is a deliberate premium paid to buy solar hardware from anywhere other than China. This scarcity persists because more than 90% of solar modules installed in the European Union are still imported from China.
China still produces more than 80% of the world’s solar components. Ajay Srivastava, founder of the Global Trade Research Initiative, told DW that China is present in almost every global solar supply chain. Even panels assembled in Vietnam or India often rely on Chinese-made cells, wafers or polysilicon.
Can India replace China as the primary solar supplier?
India is rapidly expanding its capacity, but it remains dependent on Chinese raw materials. By early 2026, India’s solar photovoltaic (PV) module manufacturing capacity reached 172 gigawatts (GW), and cell capacity nearly tripled to 30 GW.
Sanjay Varghese, a senior executive at Indian firm ReNew, attributes this growth to the “Make in India” push. This includes a roughly $2.5 billion Production-Linked Incentive (PLI) scheme and non-tariff barriers, such as the Approved List of Models and Manufacturers (ALMM). Varghese stated that five years ago, all solar modules being installed in India were being imported from China, but today, all modules, and about 50% of the cells being consumed in India, are made in India.
The “Wafer Bottleneck”
Despite module growth, a critical gap remains. Jochen Rentsch, head of technology transfer at the Fraunhofer Institute for Solar Energy Systems, notes that roughly 99% of the world’s photovoltaic wafers are still made in China. Rentsch warned that Chinese manufacturers can price wafers below production cost, making it “nearly impossible” for new entrants to compete on economics alone.
Varghese acknowledged that India still relies on Chinese firms for the tools and machinery needed to manufacture solar products.
How do European and Indian solar policies differ?
Europe lacks the aggressive, output-based subsidies found in India or the U.S. Dries Acke, CEO of SolarPower Europe, argues that Europe needs its own version of India’s PLI scheme, an output-based subsidy, similar in spirit to the US Inflation Reduction Act’s tax credits, to make local manufacturing commercially viable.
| Region | Primary Strategy | Current Limitation |
|---|---|---|
| India | PLI Scheme & Tariffs | Reliance on Chinese wafers/machinery |
| Europe | Industrial Accelerator Act | Broad “Made in Europe” definitions |
The EU’s forthcoming Industrial Accelerator Act has disappointed advocates like Acke because it defines “Made in Europe” broadly enough to include free-trade partners rather than requiring literal European production.
What are the logistics and trade risks for solar imports?
India’s west coast ports connect efficiently to Europe via the Suez Canal, which Rahul Sharan, deputy director and shipping specialist at Drewry, notes could potentially shorten delivery times. However, Sharan noted that logistics “alone is unlikely to eliminate the structural cost advantages that China has built through scale and integration.”
Trade barriers are also shifting. Varghese noted that anti-dumping and countervailing duties on Indian-origin cells and modules in the US now exceed 250%, effectively closing that market for now and pushing Indian manufacturers to look harder at Europe. Additionally, Sharan flagged the Strait of Malacca as a persistent chokepoint; disruption there could ripple through solar supply chains far beyond Asia.
FAQs on Solar Supply Chain Diversification
Why are non-Chinese solar panels more expensive?
They lack the scale and integration of China’s value chain, as seen in Italy’s 17% price premium for hardware from anywhere other than China.
Is India fully self-sufficient in solar manufacturing?
No. While India is largely self-sufficient in cells and modules, it remains dependent on China for wafers, polysilicon and manufacturing equipment, with roughly 99% of the world’s photovoltaic wafers still made in China.
What is the “China-plus-one” strategy?
According to Ajay Srivastava, it is a coordinated strategy where the US, Europe, India and others invest in parallel supply chains to avoid relying so heavily on a single supplier.
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