In 2014, EU solar module manufacturing supplied around 25% of European installations. European production capacity was just under 2 GW compared to 7-8 GW of solar panels deployed. By 2024, European manufacturing had increased only three fold, but installations had risen to around 60 GW with Europe importing 98% of its solar panels from China. The rapid scale up and cost reductions in Chinese solar modules has facilitated the surge in deployment, but it has also decimated European industry. 

China’s solar industry began in the early 2000s as an export industry, with Chinese entrepreneurs looking to tap export demand created by European feed-in tariffs. Chinese companies imported turnkey production lines and process knowhow from European and Japanese equipment makers, leveraging overlaps with the domestic semiconductor industry and the ‘plug‑and‑play’ character of cell manufacturing. The Chinese industry scaled up rapidly and exports surged. In response, anti-dumping measures were introduced by European governments in the 2010s, prompting the Chinese government to shift support toward domestic deployment. By the mid 2010s, even lower Chinese production costs, which came largely from scale, process innovation, and supply‑chain clustering, undercut EU producers, driving a wave of bankruptcies and consolidation among European cell and module makers. According to one estimate, employment from the solar sector (spanning manufacturing and operation and maintenance) fell from roughly 100,000 jobs in 2012 to around 60,000 by late 2013. 

Today, Chinese firms dominate the entire solar photovolatic value chain, supported by China’s industrial policy, but also resource and infrastructure advantages. From cell manufacturing, suppliers moved upstream, capitalising on low cost energy for electricity‑intensive polysilicon production. Xinjiang province became a key manufacturing hub given its abundant energy resources and large coal‑power base. The province also offered tax breaks and cheap land so in the early 2020s, Xinjiang alone provided close to one‑half of global solar production, while US and EU shares fell to single digits. Building on this, Chinese firms established dominance in the midstream and downstream value chain.

Concerns about forced labour in Xinjiang prompted measures such as the US Uyghur Forced Labor Prevention Act and EU forced‑labour rules. This then led to a regional reshuffle within China. Major producers expanded or shifted capacity to other Chinese provinces with hydropower or other renewable resources (as well as coal) and routed more intermediate products to Southeast Asia, where modules are assembled for Western markets. Overall Chinese control of the value chain remains above 80%.

Europe’s manufacturing base has shrunk to low single‑digit shares, mainly in niche or specialised plants. European firms such as Oxford PV and Meyer Burger have moved toward higher‑efficiency or next‑generation concepts rather than mass commodity output. But without large‑scale, long‑term policy support to offset China’s cost and capacity advantages or protect intellectual property if scaling up in China, Europe will remain heavily dependent on imported Chinese hardware and could also risk losing its technological innovation base to more dynamic markets such as China. 

It is highly unlikely that Europe will resuscitate its solar industry. Non-Chinese panels are three times more expensive and often still contain Chinese components. But innovation in Europe can and should be protected especially for next generation technologies. Creative industrial policies can help scale up.