Italy’s first renewable energy auction restricted to solar projects built without Chinese-manufactured equipment has highlighted both Europe’s determination to diversify its clean energy supply chains and the significant challenges involved. In December 2025, Italy awarded more than 1.1 gigawatts of solar capacity across 88 projects, with winning bids averaging €66.38 per megawatt-hour, around 17% higher than prices recorded in unrestricted renewable auctions earlier that year. The higher costs reflected a deliberate decision to source equipment outside China, emphasizing growing concerns about supply chain resilience and the future of EU solar manufacturing.
China remains the dominant force in the global solar industry, producing more than 80% of the world’s solar components and controlling nearly every stage of the photovoltaic supply chain, from polysilicon and wafers to finished solar modules. More than 90% of the solar modules installed across the European Union continue to be imported from China. Although this manufacturing scale has reduced global solar costs and accelerated renewable energy deployment, governments in Europe and elsewhere are increasingly concerned about relying so heavily on a single supplier for critical energy infrastructure.
India has emerged as one of the most promising alternatives through an ambitious government-backed manufacturing strategy. Under the “Make in India” initiative, supported by tariffs, domestic procurement requirements, and approximately $2.5 billion in Production-Linked Incentive funding, India’s solar manufacturing capacity has expanded rapidly. By early 2026, the country had reached 172 gigawatts of photovoltaic module manufacturing capacity and approximately 30 gigawatts of solar cell production. Indian manufacturers now supply all domestically installed solar modules and around half of the country’s solar cells, with plans to develop a complete domestic supply chain over the next five to seven years. This expansion could create new export opportunities while supporting global diversification efforts and strengthening EU solar manufacturing through additional sources of equipment.
Despite this rapid growth, experts caution that India cannot yet replace China across the entire solar value chain. China still manufactures roughly 99% of the world’s photovoltaic wafers and dominates the production of polysilicon, manufacturing equipment, and advanced solar technologies. Indian manufacturers continue to depend on Chinese machinery and upstream materials, meaning that replacing Chinese modules with Indian products would reduce only part of Europe’s supply chain dependence rather than eliminate it completely.
Europe faces a different challenge as renewable energy deployment accelerates. Countries such as Germany require enormous volumes of solar equipment to meet ambitious renewable electricity targets, while domestic module manufacturing has declined substantially. Although European companies remain competitive in areas such as inverters, mounting systems, battery storage, and manufacturing equipment, industry representatives argue that stronger financial incentives similar to India’s Production-Linked Incentive program or the United States’ Inflation Reduction Act are needed to make EU solar manufacturing economically competitive.
Trade policies and global logistics also influence future supply chains. High US tariffs on Indian solar products have redirected Indian manufacturers toward European markets, while India’s location offers relatively efficient shipping routes through the Suez Canal. However, experts note that logistical advantages alone cannot overcome China’s long-established manufacturing scale and cost efficiencies. Analysts conclude that a coordinated “China-plus-one” strategy involving Europe, India, the United States, and other partners offers the most practical path toward more resilient global solar supply chains. Achieving this objective will require long-term investment, industrial cooperation, and sustained policy support to expand EU solar manufacturing while reducing strategic dependence on a single supplier.
https://www.dw.com/en/can-india-europe-build-a-clean-energy-supply-chain-beyond-china/a-77852031