The EU has taken its most direct step yet to cut Chinese clean energy hardware out of publicly funded projects, banning Chinese inverters from all EU-funded schemes in a move Brussels described as the first in a series of actions targeting high-risk suppliers.

“We decided we will take concrete action right now … that has included developing guidance on restricting the use of EU funds for projects involving inverters from high-risk suppliers,” European Commission spokeswoman Siobhan McGarry said on Monday, confirming an exclusive report by the South China Morning Post last month.

A European Union official said Brussels had identified four countries as high-risk – China, Russia, North Korea and Iran – but only China, which controlled 80 per cent of global supply, had a dominant presence in the European inverter market.

Chinese brands Huawei and Sungrow ranked as the world’s top two solar inverter manufacturers in the first half of last year, ahead of Germany’s SMA and Austria’s Fronius, according to a report published by natural resources consultancy Wood Mackenzie in January.

The EU official said Brussels had identified cybersecurity and dependency risks in inverters, devices that convert renewable power into grid-ready electricity.

Financial institutions had until May 15 to notify the European Commission of ongoing projects – in or outside the EU – using Chinese inverters connected to the EU grid. Brussels would then decide by November 1 – on a case-by-case basis – whether to grant exemptions for projects that were too far along to switch suppliers without disrupting deployment, the official said. The European Commission did not spell out what Chinese companies could do to get off the blacklist.

The official said Brussels believed there were more than enough non-Chinese suppliers for the sector to absorb the switch, with the additional cost estimated at less than 2 per cent.