The war for renewable energy. The EU excludes Chinese components, investment costs will increase dramatically
In the short term, moving away from imports from China, among others, solar panels may increase the costs of building renewable energy sources and slow down their installation in Europe – ING analysts pointed out in the Energy Outlook 2026 report. They added that China itself will continue to develop renewable energy at full speed.
Divorce with China will drive up costs
“Solar and wind will see dynamic growth in 2026, but their implementation is becoming increasingly complex due to grid constraints, trade policy and cost pressures. China dominates both the solar and wind sectors, focusing on industrial competitiveness. Europe and the United States are driven by different drivers: Europe by energy security and the United States by artificial intelligence-driven growth in energy demand,” wrote ING analysts.
They stressed that both Europe and the United States have implemented policies to strengthen domestic production of solar and wind energy equipment.
“However, in the short term, moving away from cheap products from China, which account for 98% of solar panel imports to the EU, may increase costs, disrupt cooperation with suppliers and slow down installations. In 2026, balancing long-term industrial benefits with short-term, cheaper imports will become a greater challenge,” they said.
They added that EU countries are afraid of the inflow from China and are starting to exclude supplies from China from their renewable energy auction system.
Italy at the forefront of change
“In December 2025, Italy was the first EU country to hold an auction for the supply of solar panels in which the participation of Chinese modules, cells and inverters was banned. We expect that in 2026, other countries will introduce similar auction rules – either by completely banning the participation of Chinese components or by giving priority to components manufactured in the EU. Although these measures support domestic production, the resulting benefits will only be visible after some time,” they pointed out.
They noted that excluding Chinese components or prioritizing parts from Europe could increase project costs.
“In the case of Italy – by 17%, according to BNEF estimates. Meanwhile, financing under the EU's climate neutrality policy seems insufficient to attract significant private investment. Therefore, it is unlikely that the EU's solar energy production capacity will increase significantly in the near future,” the report said.
Analysts have pointed out that in the United States, tariffs will change supply chains for solar and wind energy components this year. In 2025, the United States imposed high tariffs on PV components – on average from 350%. up to 670 percent – to Cambodia, Thailand and Vietnam, which provide a significant portion of imports to the United States. A 50% penalty was also imposed. tariff on steel-derived products, including wind towers and nacelles. Finally, the United States has launched an investigation into imports of PV components from India, Laos and Indonesia, suggesting that additional tariffs may be imposed on these countries.
Recovery in the energy storage market
The authors of the ING report also pointed out that the urgent need to increase the share of renewable energy is causing a revival in the energy storage market and they expect even stronger development of this market in 2026. They also noted the decline in the costs of battery energy storage achieved thanks to technological progress – these costs dropped by 61%. between 2020 and 2025
“Combined with rising demand, this should result in a 31% annual increase in installed capacity by 2030. Thanks to its advantage in cost and deployment of battery energy storage systems (BESS), China will have a 46% share of global installed capacity in 2026.” – they estimated.
They also noted that while battery energy storage and production policies are playing an increasingly important role, supply chain challenges remain.
“Despite these obstacles, renewable energy sources remain the fastest growing part of the global energy landscape,” the bank's analysts concluded.
Referring to China itself, they noted that the Chinese renewable energy market will develop thanks to its absolute advantage in the production of equipment for generating solar and wind energy and thanks to the goal of reducing emissions by 7-10%. by 2035 compared to their peak level.
“This means that China will continue to develop renewable energy sources at full speed,” the report emphasizes.
Europe had high hopes for reducing CO2 emissions
Referring to other technologies, including: Europe had high hopes for reducing CO2 emissions, they wrote that in 2026 CCS technology would focus on building infrastructure for transporting and storing CO2, but the launch of CO2 capture remains slow due to high costs and weak demand.
“Integrated value chain models are emerging, with stronger public support in Europe and revised incentives in the United States. However, faster capture investments require a clearer mandate and stronger demand-side policies,” the report said.
Analysts also pointed to halted progress in green hydrogen due to rising costs and delays in the acceptance of installations.
What about hydrogen?
“Hopes for the rapid development of the hydrogen sector have faded, and the industry is stuck in the pilot phase. Costs remain high, demand is weak, and government support has weakened. This year, the world's attention is focused on China, which has made hydrogen a key pillar of its 15th five-year plan,” ING experts wrote.
They added that the construction of large-scale electrolyzers and new subsidy programs in China could redefine global cost curves.
“However, trade restrictions mean that Europe and the United States may not benefit fully. In 2026, the focus there is on progress in pilot projects towards final investment decisions, rather than large-scale expansion,” they added.
During the World Economic Forum in Davos, US President Donald Trump said that China produces almost all the wind turbines in the world, but it is difficult to find wind farms there.
In May last year, the energy think tank Ember reported that in April 2025, wind and solar sources in China together generated 26%. country's electricity. (PAP Business)
jz/ ana/ pad/
