Chinese Solar Power Costs Four Cents per Kilowatt-Hour, Five Times Below European Levels
Bloomberg data show a widening manufacturing cost gap that European policymakers and power market participants cannot easily close.
Chinese solar power has reached 4 cents per kilowatt-hour, roughly five times cheaper than equivalent European generation, according to Bloomberg.3 That cost gap has arrived alongside a sharp contraction in Chinese domestic installations, creating pressure on manufacturers to push harder into export markets at a moment when Europe is simultaneously discovering how much it needs solar and how exposed it is to its dominant supplier.
China added 72.07 GW of new solar capacity in the first half of 2026, down from 212.2 GW in the same period a year earlier — a 66% decline reported by oilprice.com on 2026-08-28.6 Beijing ended export tax refunds on solar products on 2026-04-01, a change analysts expected to slow shipments; Chinese solar equipment exports fell 21.4% year-on-year in the month that followed, according to Chinese customs data.6,4
The installation collapse has caught up with the manufacturers that scaled to serve the domestic boom. Jinko Solar, JA Solar Technology and Tongwei all reported deepening losses in the first half of 2026.6 China produced solar cells with 680 GW of capacity in 2025, while its polysilicon foundries held capacity for 1,200 GW, the Economist reported — an overhang that has not cleared.2 When domestic demand retreats, that surplus production looks for export markets. Europe is the obvious destination.
Europe's vulnerability runs deeper than price. An analyst at the Solar 2026 seminar in Helsinki on 2026-05-19 told the audience, as reported by Montel, that the European solar sector's reliance on Chinese-made components leaves the bloc open to attacks on its energy system.1 The argument is not primarily about cost. It is about what happens to European generation capacity if that supply relationship breaks down. No European country can currently replicate China's manufacturing scale or its cost structure quickly enough to matter in the near term.
This summer made the stakes concrete. Europe's solar panels produced 17% more power than normal during the continent's heat waves, stabilizing the grid as afternoon cooling demand climbed, according to Ember.5 Italy's power demand rose 28% in late June compared with the prior week; France's rose 14%, Ember found.5 In mid-July, France lost 18% of its nuclear capacity to environmental factors, extending its pattern of summertime outages.5 Solar filled part of that gap. It will need to fill more of it as temperatures rise.
Still, cooling remains a thin slice of European electricity demand. Just 23% of European households have access to or use air conditioning, according to Canary Media's reporting.5 As that share grows — and the summer of 2026 will accelerate the process — the call on flexible generation rises with it. European power markets will have to price that new load profile, and the fuel that serves the peak will matter more than it does now.
German front-month power settled at €162.18/MWh on 2026-09-16, with ICE Endex TTF front-month at €78.17/MWh on the same session.5 Those levels do not appear to reflect any near-term anxiety about solar supply disruption. The market is pricing European solar growth as a smooth continuation, not a chain with a single point of failure in Chinese component supply.
China's broader clean-technology position reinforces why that assumption may be tested. Chinese companies filed around 75% of global clean-technology patent applications in 2025, up from 5% in 2000, according to Ember.2 State support has been substantial: Chinese EV makers received $231 billion in subsidies between 2009 and 2023, per the Centre for Strategic and International Studies, against roughly $80 billion in US government support for Detroit after the global financial crisis.2 Solar has been built on comparable foundations.
By end-June 2026, China's solar installed base stood at 1,274 GW, just below its 1,275 GW of coal-fired capacity, oilprice.com reported.6 Two sectors of roughly equal scale now sit alongside each other. One is shrinking in new additions; the other is churning out equipment at a cost that no other region matches.
If the policy-driven installation slowdown continues through the second half of 2026, Chinese manufacturers facing domestic overcapacity will push export volumes harder, which could compress European solar equipment prices further and accelerate installations on the continent. That would reduce Europe's carbon intensity and ease demand for EUA allowances. It would also deepen Europe's reliance on the components the Helsinki analyst flagged in May as a security exposure. The pace of second-half Chinese installations is the number worth tracking.4,1