On Monday, the European Commission spokesperson announced during a press conference that the Commission has recommended EU member states to exclude Huawei and ZTE from the 5G network and solar inverter projects to avoid risks of critical infrastructure being controlled by the Chinese Communist Party.
An inverter is a relatively small yet crucial component in modern energy systems. Often referred to as the “brain” of the grid, its main function is to convert the direct current generated from renewable energy sources like wind and solar into alternating current and transmit it to the grid or storage systems, thus playing a core role in the EU’s energy transition.
The EU Commission spokesperson Siobhan McGarry informed reporters that the EU has decided to take “immediate concrete actions” to eliminate the risk of foreign interference in critical infrastructure. Discussions are ongoing about new network security rules that will restrict EU funds for projects involving high-risk suppliers of inverters.
This move came after analysts warned about Europe’s heavy reliance on Chinese companies like Huawei and Sungrow for manufacturing solar inverters, which could pose security risks to the stability of European grids, especially with the increasing dependence on renewable energy sources like solar and wind in Europe.
McGarry explicitly stated at the press conference that risks of hostile foreign interference in the EU’s clean energy network include manipulation of power production parameters, disrupting power production, and unauthorized access to operational data. This means that hostile nations could potentially “remote shutdown” these facilities, leading to widespread blackouts across EU countries.
An anonymous EU official told Politico that suppliers from China, Russia, North Korea, and Iran are all affected by the ban. However, the EU’s actions primarily target Chinese firms since Chinese suppliers hold an 80% share of the global solar inverter market, with Huawei being one of the major players.
The EU Commission noted that inverters account for around 5% of the costs of large solar installations, and switching to non-high-risk suppliers is projected to increase project costs by less than 2%. This implies that companies from trustworthy partners like Japan, South Korea, Switzerland, and the United States remain eligible for EU funding and are poised to quickly fill the market gap.
Nevertheless, there are lingering concerns about the security of existing infrastructure relying on equipment from high-risk suppliers. Officials acknowledge this issue and describe the current decision as a “first step,” with additional network security measures to follow in the future.
In fact, the EU has been closely monitoring the potential threats posed by Chinese-related companies (Huawei, ZTE) in areas like 5G networks and has urged member states to remove them from telecom systems. The EU is progressively adopting a more assertive stance to strengthen the cybersecurity of critical digital infrastructure in the 27 member states.
Previously, the EU Commission stated in a report that the decisions of some member states to restrict or exclude Huawei and ZTE were justified. The report highlighted that the two Chinese firms are “higher risk” compared to other 5G suppliers, citing concerns that the Chinese government may demand cooperation for intelligence work under the National Security Law.
The revised EU Network Security Law from January 20 aims to address these risks in the medium to long term. The amendment of the law shifts from “recommendations” to enforceable “regulations,” including measures to phase out critical components from high-risk suppliers in mobile networks, with operators having around 36 months to meet the requirements.
Currently, some EU member states have restricted the use of equipment from Huawei and ZTE, but progress varies. Sweden and the Baltic countries have fully banned their use, while Germany is gradually phasing them out, mainly due to the high costs of alternatives slowing down the full ban process.
Despite EU authorities stating that the law is based on objective security assessments and not targeting any specific country, the Chinese Ministry of Commerce recently criticized these network security rules as “discriminatory” and threatened to investigate European companies and take retaliatory measures if the EU imposes restrictions on Chinese firms.