Europe Looks to Limit China’s Influence in Its Energy Grid

A new analysis by the European Union Institute for Security Studies (ISS) explains that China now has a big role in Europe’s energy system, especially through clean energy technology and grid equipment. The report warns this could create future risks for Europe’s energy security and calls for action to reduce dependence. 

What the “Dragon in the Grid” Report Says

The ISS brief, titled “The dragon in the grid,” says that China has embedded itself deeply into key parts of the European energy system. This includes:

• Solar panel supply chains — China makes most of the world’s solar PV wafers and panels.
• Wind power equipment and critical technology — China also dominates many parts of clean energy production.
• Grid technology and electronics such as solar inverters, which connect solar panels to the electricity grid.

Because of this dominance, the report says Europe could be vulnerable if China used energy technology as a political or economic tool.

China’s Role in Europe’s Clean Energy

China has grown as a global leader in clean energy technology:

• It controls almost all of the solar PV wafer production worldwide, which are the basic building blocks of solar panels.
• By 2024, China also became the largest producer of green hydrogen and related technologies, and it’s exporting energy products like synthetic fuels to Europe.

The brief says this gives China influence not just over hardware, but also over how Europe’s grid evolves as it adds more renewable energy. 

Why This Creates Risk

Europe’s power grid now relies on foreign technology, and Chinese products are everywhere:

• Devices like solar inverters from Chinese firms are used on many European solar systems. These units help turn sunlight into usable electricity, but some policymakers worry they could be linked to remote digital systems that might be exploited in a crisis.
• Chinese companies also own shares in European utilities and transmission operators, giving them some influence over how energy systems work.

Experts worry that China’s near-total market share and technology reach could make Europe more dependent on foreign parts and systems just when clean energy infrastructure is expanding.

What the Report Recommends

The ISS brief says Europe must act to reduce risks while still meeting its clean energy goals:

1. Improve Local Production

• Europe should use public funds and procurement rules to support “Made in Europe” energy technology, especially for critical parts like inverters and grid electronics.
• Building more European factories for solar, wind and other technology could limit China’s role.

2. Use Trade and Security Policies

• The EU can place trade limits or safeguards on imports of high-risk technology.
• The report suggests that cross-border grid projects funded by EU money could phase out Chinese components to reduce strategic dependence.

3. Protect Sensitive Sectors

• Some types of energy infrastructure — like military-relevant power systems — should use trusted European technology to avoid possible influence or control by foreign companies.

Why Europe Is Concerned

China’s influence in the energy system isn’t just about imports. It’s about geopolitical power:

• China has shown it can use economic dependencies as geopolitical leverage in the past — for example, in rare earth minerals and other supply chains.
• Because many energy devices are connected digitally, cybersecurity risks are a concern if foreign companies control hardware or software that manages grid data or operations.

European leaders also want to protect trust and cooperation among member states in energy planning and grid operations — something that could be weakened if dependence on foreign firms grows.

Balancing Clean Energy With Security

Over the past decade, Europe has rapidly increased renewable energy use, but most of the supply chain for key parts has shifted to China or Asian markets.

This creates a challenge:

• Clean energy is good for climate goals and long-term electricity prices.
• But too much reliance on foreign technology could reduce Europe’s strategic independence.

The ISS brief says that Europe should aim for both clean energy growth and strategic control over the technologies that power its grid — building a system that is both secure and green.

Bottom Line

The new ISS analysis warns that China’s deep involvement in the European energy system — from solar supply chains to grid technology — poses strategic risks. To protect energy security while pursuing climate goals, Europe needs policies that strengthen local industry, manage cybersecurity risks, and reduce overdependence on foreign technology for critical grid infrastructure.