Once an extortionate investment reserved for the ‘eco-elite’, solar has rapidly become one of the cheapest electricity sources in the world. But, are the tables about to turn?
Solar photovoltaic (PV) panels, composed of individual solar cells that convert sunlight into electricity, have plummeted in price by a staggering 90 per cent in the last decade. According to Our World In Data, costs have dropped by around 20 per cent every time the global cumulative capacity doubles.
At the same time, the price of solar batteries, which allow households to store electricity during peak times, have also decreased by 90 per cent since 2010 due to advances in battery chemistry and manufacturing.
The EU now describes solar as a “shining star” of Europe’s clean transition, accounting for almost a quarter (23.4 per cent) of its electricity consumption in 2024. In June last year, the sun was the main source of the electricity generated in the EU.
Amid the war on Iran, solar is helping to cushion households from volatile fossil fuel shocks. Recent analysis found that harnessing sunlight for power saved Europe more than €100 million per day throughout March by reducing gas imports.
If prices remain high, due to Iran’s stranglehold on the Strait of Hormuz, experts say these savings could reach €67.5 billion by the end of the year.
The ongoing conflict in the Middle East has also bolstered interest in household electrification, with multiple energy firms across Europe reporting a recent spike in solar panel and solar battery inquiries.
However, as demand for solar panels soars, foreign tax policy, the price of silver and other influences could soon ignite a price surge.
Where does Europe get its solar panels from?
While the EU describes solar as having a “significant role in its transition towards cleaner, more affordable and secure” energy, it remains heavily reliant on countries outside of the bloc to make PV panels.
In 2024, the EU imported €14.6 billion in green energy products, including €11.1 billion worth of solar panels. China was by far the largest supplier of these panels, accounting for 98 per cent of all imports.
According to the International Energy Agency (IEA), China has invested more than $50 billion (€43 billion) in new PV supply capacity – 10 times more than Europe – and created more than 300,000 manufacturing jobs across the solar PV value chain since 2011. Today, the country’s share in all of the manufacturing stages of solar panels exceeds 80 per cent globally.
“Chinese manufacturers have reached scale and cost levels that cannot be matched outside of China,” Jannik Schall of clean tech startup 1KOMMA5° tells Euronews Earth.
“There are factories in other countries, even in Europe, but they only focus on the final assembly of solar panels and cannot compete with China from a cost perspective.”
China’s monopoly on solar panels hasn’t been a clear victory for the country, with tight competition pushing companies to sell below cost. An IEA report from last year found that China-based solar companies had made cumulative net losses of around $5 billion (€4.3 billion) since the beginning of 2024.
This led to China’s Ministry of Finance and State Tax Administration announcing major reform to its generous renewables subsidies, which were originally designed to support foreign trading.
From 1 April 2026, the nine per cent VAT export rebate on solar products was eliminated, while the nine per cent VAT export rebate on battery products was reduced to six per cent. The VAT rebate on battery products will be completely scrapped from 1 January 2027.
Just before the tax reform came into place, Chinese solar exports skyrocketed as countries scrambled to beat the price hike.
Energy think-tank Ember found that during March 2026, several European countries, including France, Italy, Poland and Romania, hit all-time records for the number of Chinese solar imports.
Will China’s VAT reform increase the cost of solar?
“The elimination of China’s VAT export rebates alone will cause module prices to rise by around 10 per cent,” Schall tells Euronews Earth. Solar modules is the standard-industry term for a single PV unit.
British newspaper The i has warned that one national solar installer has been forced to charge £800 (€918) more for an average rooftop installation.
So is a blanket price rise expected across the board? It’s not that simple.
Experts say that the market does not react this quickly, and the increasing price of solar panels won’t bite straight away.
Analysts do not expect the rise in cost to limit demand for solar, given its competitive pricing, either. However, it does demonstrate that even renewables are not completely shielded from the intricacies of geopolitics – an argument that frequently arises when speaking about fossil fuel shocks.
InfoLink Consulting, a Taipei-based firm that provides market intelligence, price forecasting and supply chain analysis for solar PV, says that while ground-mounted projects (often used in large-scale solar farms) have edged up in recent weeks, high order volumes have constrained any rise in average prices.
Meanwhile, the price of small-scale or ‘distributed’ solar power systems, like those installed directly on rooftops or carports, has continued to fall marginally, InfoLink said earlier this week (13 May).
How silver became solar’s crux
To understand why solar costs fluctuate, it’s important to understand how PV panels are designed.
Solar panels are predominantly made of glass, plastic polymer and aluminum. Silver, which is the most effective metallic conductor of electricity and heat, is also a key material for PV panels.
Despite representing less than five per cent of a total PV panel in terms of weight, silver paste accounts for up to 30 per cent of total solar cell costs, analysts at German technology group Heraeus state.
According to the Silver Institute, around 4,000 tonnes of silver, equivalent to 14 per cent of global silver consumption, were used for PV panel production in 2023 alone. Researchers warn this share is expected to increase to 20 per cent by 2030, a fourfold increase since 2014.
Chinese manufacturers have therefore been boosting efforts to tackle this, by replacing silver with cheaper metals such as copper. Experts predict switching from silver to copper-based metallisation could save the solar industry roughly $15 billion (€12.8 billion) per year globally.
However, the price of copper has also increased in recent years, albeit at a slower pace than silver.
“Driven by geopolitical uncertainty, supply shortages and increasing demand from AI data centres, prices for copper, aluminum and lithium have increased significantly since Q4 of 2025,” Schall explains.
“Silver prices have reached 150+ per cent increases within a few weeks in the beginning of 2026, making silver the biggest cost contributor in solar panels. These cost increases on the raw material side need time to trickle down through the value chain and are expected to reach end consumers this summer
1KOMMA5° forecasts that the additional high raw material costs, alongside China’s VAT elimination, could cause price increases of 15 to 20 per cent for individual components.
Schall adds that while residential customers will be affected by this in the “medium term” those wanting to install PV panels can still benefit from “more favourable prices” right now.
Euronews Earth reached out to two energy firms in Europe to ask whether they intend to raise their solar panel prices following China’s tax reform and the increasing price of silver. Both declined to comment.
Despite uncertainty, experts point out that solar prices are still around 50 per cent down compared to 2023, making it one of the cheapest sources of electricity in the world.
