Does Developing Solar Cells in Europe Still Make Sense?
I. The Starting Point: A Settled Contest
China produces more than 80 percent of all solar cells in the world. Not in one segment of the value chain — in all of them: polysilicon, ingots, wafers, cells, modules. China's solar cell capacity exceeds that of the rest of the world seventeen-fold. A module manufactured in China costs half of the European equivalent — after decades of state support, massive scaling and complete vertical integration of the supply chain.
The numbers speak for themselves: China has invested over 50 billion dollars in new solar capacity since 2011 — ten times more than Europe. Chinese annual production capacity already exceeds 700 gigawatts in 2026. Global annual demand stands at around 400 gigawatts. China can serve the entire world market through 2032 on its own — and has already built the capacity to do so.
Europe currently operates around 60 solar factories with a combined capacity of 8.4 gigawatts. In the last two years, 2.4 gigawatts have been shut down, a further 2.7 gigawatts put on hold. The direction is clear: the market is already answering.
Those who ask, in this context, whether Europe should produce standard solar cells are asking a question the market has already answered. Mass production of standard cells in Europe is economically finished. That is not an industrial failure — it is the consequence of a geopolitical and industrial-policy decision that China made thirty years ago and Europe did not.
But that is the wrong question. The right question is: which parts of the solar value chain, which technology generations, which strategic goals justify European investment?
II. The Geopolitical Risk of Total Dependency
Before the economic analysis, a structural point: complete dependency on a single supplier for a key technology of the energy transition is a strategic risk — regardless of whether that supplier is today cheap and reliable.
95 percent of global ingot and wafer production lies in China. 40 percent of global polysilicon production comes from Xinjiang province. A single Chinese facility produces one seventh of all solar modules worldwide. That is a concentration that is not considered safe in any critical supply chain.
China has shown that it can deploy export controls on critical raw materials strategically — rare earths, gallium, germanium. Those who believe solar modules are exempt from this logic because China has an interest in a global energy transition are overlooking that China has an interest in a global energy transition under Chinese technological control. That is not the same thing.
Europe learned this lesson with Russian gas — late and painfully. The question is whether it wants to learn it with Chinese solar modules before or after the problem materialises.
III. Where Europe Cannot Compete — and Should Not Try
Standard silicon cells — TOPCon, PERC, the current commodity — are a commodity product. Price decides. And the price is 0.12 to 0.15 dollars per watt FOB China. This price is the result of scale effects, complete vertical integration, decades of state subsidies and energy prices subsidised through coal-fired power in Xinjiang.
Europe cannot reach this price — not through efficiency gains, not through automation, not through subsidies. The cost difference is structural, not operational. Those who nonetheless try to compete in this segment are wasting industrial policy.
This applies equally to the approach of protecting European production through high import tariffs. Tariffs increase the costs of the energy transition — they make solar power more expensive for all European consumers and businesses. That is not an argument against tariffs per se; strategic resilience has a price. But this price must be paid consciously, not as a side effect of industrial policy pretending to promote competitive mass production.
IV. Where Europe Is Still in the Race — Perovskite
There is a technology in which Europe has not yet lost, because nobody has yet won: perovskite solar cells.
Perovskite is a class of materials achieving efficiencies above 33 percent in tandem configurations with silicon — significantly above the physical limit of pure silicon cells at around 29 percent. European and American research institutions hold significant patent positions in this technology. China is active in research but has not yet established dominant market position.
The window is narrow. Perovskite still has unresolved stability problems — lifetime under real conditions is still significantly below that of silicon modules. But research is developing rapidly, and those who commercialise the technology when these problems are solved will determine the next generation of the global solar supply chain.
Europe has a realistic chance here — if it invests now, not when China has also mastered the technology. This requires concentrated support for research and early commercialisation, not mass production. It requires the willingness to invest in a technology area that is not yet mature — with all the risks that entails.
V. The Right Question About the Value Chain
Alongside the technology question, there is a question about the right level of the value chain. Not all levels are equally strategic — and not all are equally lost.
Polysilicon: Europe and the US still have relevant capacities in high-purity polysilicon — the raw material. Maintaining this capacity is strategically sensible because polysilicon is also needed for semiconductors and because it is the only link in which the West has not yet been fully marginalised.
System components: Inverters, mounting systems, storage technology, grid integration — here Europe has a realistic competitive position. These components are less standardised, require more engineering performance, and price competition is less brutal. Companies like SMA Solar in Kassel or Fronius in Austria are globally relevant — not despite European costs, but because of European engineering quality.
Recycling: Europe has been installing solar modules for decades. The first generation is reaching end of life. Recycling silicon, silver, indium from old modules is becoming a significant market — and Europe has regulatory and technological first-mover advantages here. This is not glamorous business, but it is strategically sensible.
Quality assurance and certification: As the world's largest import market for solar modules, Europe has the market power to set standards. Sustainability requirements, traceability, labour conditions in the supply chain — the Net Zero Industry Act begins this. Those who set the standards have influence over the global supply chain, even without producing themselves.
VI. The Strategic Minimum Capacity
There is an argument for European solar production that is not an economic calculation: the argument for strategic minimum capacity.
A capacity large enough to cover critical needs in an emergency — not mass demand, but that for critical infrastructure, for the military, for emergency supply — has strategic value that cannot be expressed in market prices. This is the logic with which Europe also considers pharmaceutical raw materials, semiconductors and other critical technologies: not as market policy, but as an insurance premium.
This capacity does not need to be large. It does not need to be competitive. It needs to exist and remain functional. That is a different argument from the argument for European mass production — and a more convincing one.
In summary: the question of whether Europe should develop solar cells has no simple answer — because it is the wrong question. The right answer runs: Europe should develop perovskite, produce system components, build recycling capacity, set standards, maintain a strategic minimum capacity — and stop trying to replicate Chinese commodity production. That costs less, delivers more, and is honest about the starting point.
The contest that is lost is the one over the standard silicon cell.
The contest still open is the one over the next generation.
Those who confuse the two
invest in a defeat
and miss an opportunity. — beyond-decay.org