As Europe moves away from Russian gas, the region wants solar to become its main source of electricity by 2030. One of the challenges will be to achieve this without becoming dependent on China for energy.

Breaking its near-total reliance on China has become a top priority for the bloc as it seeks to cut greenhouse gas emissions and fill the gap left by Moscow's move away from Russian fossil fuels following its invasion of Ukraine. EU countries are now installing more solar panels than ever before, most of them made in China.

Italian Economy and Finance Minister Giancarlo Giorgetti said referring to China that we must avoid entering a new state of dependence. What we are missing and what we need is increased manufacturing activity in key sectors of the future.

EU leaders met in Brussels in the coming days to agree on a plan to subsidize solar panel makers and other green industries. China, India and other countries have stepped up subsidies for these industries. Building a viable solar panel industry in Europe will not be easy, analysts and officials say. European factories will have to compete with Chinese manufacturers, which are subsidized by Beijing and able to undercut new rivals by cutting prices.

Continental Europe is betting on homegrown projects, such as a massive solar panel factory in Sicily owned by Italian energy company Enel. In recent days, Enel has detailed plans to increase the plant's capacity by mid-2024, with the goal of producing enough solar panels to generate 3 gigawatts of electricity per year. The plant currently produces 200 megawatts of solar panels per year. This will make it the largest solar panel factory in Europe. Enel and other European companies say their more efficient and longer-lasting solar panels, combined with the attractiveness of European-made products, will allow them to compete with Chinese companies. Still, Enel and other manufacturers in the European solar space still rely largely on silicon wafers and other components made in China to assemble their panels. In the first 10 months of 2022, the EU imported 17.5 billion euros worth of solar components and equipment from China, accounting for 95% of the EU's total solar-related imports.

Eliano Russo, head of Enel's 3Sun solar panel factory in Sicily, said Enel was already taking steps to reduce its reliance on China by building new partnerships with European and North American suppliers. We need to rebuild our ecosystem of partners to shift supply chains with the goal of accelerating decarbonization without compromising our energy independence, Russo said.

From 2025 onwards, Enel will no longer rely heavily on Asian suppliers, Russo said. The upgrade of the Sicilian plant is estimated to cost around 600 million euros, of which 188 million euros will be provided by the European Union. Conditions attached to the EU funding included that 60 percent of the plant's output be dedicated to the European market.

The EU wants renewables to account for 45 percent of its energy production by 2030, up from 17 percent now. Solar panels, which are easier to install than towering wind turbines, will become the main source of electricity under the EU's plan to fight climate change. The EU hopes to have around 600 gigawatts of solar capacity by the end of the decade, about three times the current level. The European Union is considering more subsidies to encourage new solar panel factories and expand existing ones.

Investors in the European solar industry hope that the European Union will ease rules on state-sponsored enterprises so that a lot of money will flow to manufacturers in the solar field. The European Commission, the bloc's executive arm, previously said it would recommend allowing more subsidies for solar and other renewable energy capacity in Europe.

It is unclear, however, whether Europe is ready to spend enough to allow local producers to compete with China. European plans also face challenges from the United States. Under the Inflation Cut Act, the U.S. provides huge subsidies to companies that make solar panels and other clean-tech factories. The sudden emergence of a new competitor is the equivalent of another China in the West Wing with such a generous industrial policy, said Dries Acker, policy director for the European Solar Energy Association, a trade group. Editor/XingWentao