Australia faces a growing dilemma: in attempting to ease genuine climate challenges, it is creating national security vulnerabilities by embedding Chinese smart technologies in critical infrastructure. This includes solar inverters and batteries.

Electric vehicles, too, are needed for the transition to renewables—and increasingly come from China filled with internet-linked systems.

Recent media reporting highlighted the existence of undocumented control devices in some China-made inverters, which change direct current from solar panels into the alternating current that goes into the grid. Unfortunately, this is not new. We’ve long known smart devices can be remotely accessed, raising concerns over data control and cybersecurity.

But the risk is worsening as AI amplifies cyber threats and geostrategic competition becomes harsher. Climate policy is now wrapped up with national security policy.

So how can Australia meet its legislated emissions-reduction target of 43 percent by 2030 while also managing cyber and systemic risks in the internet-connected infrastructure and AI systems we use daily? We need to ensure that the transition to renewables doesn’t introduce new and long-term national security vulnerabilities into our critical infrastructure.

Cyber expert Rachael Falk warned in 2023 of escalating threats that solar inverters and smart home devices could pose as the internet of things expanded. She argued for a ‘concerted global approach’. It was already clear then that inverters—central to household and industrial energy systems—had become a pathway for malicious actors to sabotage systems or feed false data to the grid.

Such interference has the potential to result in costly blackouts, in which a grid loses all power and must be restored with what’s called a black start. That can take weeks. The risk has been highlighted by a US incident involving Chinese-disrupted inverters in 2024 and widespread power outages in Spain and Portugal in April.

Australia’s $20 billion Rewiring the Nation initiative aims to modernise the grid and support a renewable transition, with a target of 82 percent renewable electricity by 2030. This includes installing 22,000 solar panels daily, 40 wind turbines monthly and 10,000 kilometres of transition lines within the target period. Complementary policies include the $2.3 billion Cheaper Home Batteries Program, which launches on 1 July, and multi-billion-dollar investments in industrial-scale battery energy storage systems.

These initiatives are ambitious and necessary, and we should expect to see more of them. But things become complicated for Australia, and for the many other countries engaging in serious energy transition, when we examine the core technologies, equipment and supply chains underpinning such transitions. Chinese firms dominate these markets, producing 76 percent of the world’s inverters and comprising more than 91 percent of solar battery supply chains. These companies are legally obliged to cooperate with China’s national security agencies. Australia and its partners shouldn’t ignore the risks.

Then there are forced-labour concerns linked to some of the companies supplying this equipment to Australia. For example, ASPI research found that some of the materials required for large-scale Australian battery projects have been linked to forced labour, particularly from Uyghur and other Turkic ethnic groups in China.

Beijing’s 2023 Digital China blueprint explicitly integrates digital infrastructure and energy transformation. Smart grids have been formally designated as a component of China’s critical information infrastructure. This reflects duality in the technology’s  function: delivering electricity in a way that enables the generation of masses of precision data, which is considered to be a nationally important strategic resource. In doing so, the smart grid gives China the tools to merge energy production with data governance that, ultimately, enables the CCP’s political control.

So, while Beijing has sought to reduce China’s technology dependence on the rest of the world, it has increased the world’s technological dependence on China. Australia’s modern energy system illustrates this.

Inverters from such Chinee makers as Huawei, Sungrow and GoodWe are widely used in Australia, in both residential and utility-scale solar projects. Sungrow has also supplied fully integrated storage systems. Battery cells from the Chinese companies CATL and BYD appear in several large-scale storage projects. Chinese firms have invested indirectly in Australian energy assets: the State Grid Corporation of China owns stakes in Jemena and AusNet, while CHINT Group has partnered with local developers to advance large-scale photovoltaic projects.

ASPI analysed renewable projects each of more than 10 megawatts capacity and within 200 km of key defence and industrial infrastructure. This analysis identified 37 such projects, 17 of which had clear Chinese involvement. This was reflected throughout the supply chain. The Merredin and Katherine solar farms, for example, use photovoltaic (PV) solar systems from Risen Energy. Similarly, the Chichester and Rodds Bay projects employ China-made panels, while Haughton features Trina modules in conjunction with Chinese batteries. The Kwinana Big Battery and the Waratah Super Battery integrate cells from CATL. In the wind sector, Goldwind turbines and associated control systems are used in significant developments including Clarke Creek, Stockyard Hill, and Moorabool.

Even sites established as part of the Defence Renewable Energy and Energy Security Program—a $64 million government investment to deliver solar energy generation and battery storage systems at 10 Defence sites throughout Australia—use Chinese components. The RAAF Darwin solar farm, for example, has PV solar systems from China, according to the local energy provider registry.

Chinese ownership further amplifies these risks. Pacific Hydro, owned by China’s State Power Investment Corporation, manages several projects. Goldwind is involved in Gullen Range, Moorabool and other major wind projects. Sungrow, Huawei, CATL, Trina, and Jinko consistently appear across these developments, underlining the deep presence of Chinese capital and technology.

China’s smart internet-of-things ambition extends to electric vehicles. Earlier this year, it emerged that major Chinese electric vehicle makers had established strategic partnerships with DeepSeek, with plans to integrate that Chinese company’s AI technology in their products. This creates a further point of tension between Australia’s important renewable ambitions and its national security responsibilities.

Tax breaks and other financial incentives are helping to shift Australians to electric vehicles, now mostly from China. It’s in Australia’s interests to have more Australians driving electric vehicles. But it’s not in Australia’s interests for that to result in the proliferation of China’s AI-capable internet of things systems across the country—noting the Australian government, top universities and corporations have already banned employees from using DeepSeek on work devices. But unlike inverters, this is not a hardware risk; it’s a software one.

Cost appears to be trumping security in much of the market, highlighting that there’s more work to do, including in areas such as economic security, addressing supply chain risks and building greater national resilience against some of these security challenges. The Australian Energy Market Operator reported in May that costs for transmission projects have surged—overhead lines are up as much as 55 percent over the past year and substations by as much as 35 percent—making secure alternatives more expensive and politically harder to justify. The steep hike is expected to affect home electricity bills.

That means we’re confronting not just supply chain risks, but also market distortion risks. Chinese technology dominance is a result of price, not necessarily quality or trustworthiness, and any attempt to secure alternatives must navigate the politics of affordability.

This is playing out as US–China technological rivalry accelerates. As ASPI analysts note, in this context, Australia’s decisions need to be shaped less by China’s stated intent and more by its growing capabilities—especially when these intersect with critical infrastructure.

While deepened intelligence-sharing is important for understanding threats to Australia’s critical infrastructure, the threats to Australia’s renewable ecosystem are not simply an intelligence or security problem.

Similarly, cybersecurity policy alone is not enough. The 2023-2030 Australian Cyber Security Strategy, the landmark Cyber Security Act 2024 and ongoing amendments to the Security of Critical Infrastructure Act along with the Australian Cyber Security Centre’s consistent outreach shows Australia has not been idle in addressing the cybersecurity risks. Despite this progress, the complex—and interrelated—set of challenges outlined still requires addressing.

Evolving threats demand updated tools. That might include physical and technical verification for high-risk systems, including AI, not just compliance paperwork. The government would also benefit from studying Lithuania’s 2024 law, which limits remote access to inverters at its solar and wind power plants that produce more than 100 kilowatts.

Australia’s $22.7 billion Future Made in Australia fund and Solar Sunshot program signal a vital shift towards building local clean tech capability. But economic benefit alone shouldn’t drive these climate efforts. Investments need also to prioritise cyber security, supply chain resilience and avoidance of support for forced labour.

That means working with international partners to build trusted supply chains and, in areas where we have comparative advantage, accelerate efforts to build sovereign capabilities. It also means rejecting the false binary of cheap versus secure, and instead adopting a fit-for-purpose standard: if a technology is insecure or vulnerable to coercion, or could be exploited in the future, it’s not fit—regardless of how cheap it is.

There’s a strong case for a structured, risk-based approach that distinguishes between what can be mitigated through standards, what requires targeted investment, and what demands structural decoupling. Policy levers—procurement, subsidies, sovereign capabilities, or strategic partnerships—provide a menu of options to support.

Australia’s challenge is to decarbonise without compromising national security. This means ensuring the vital transition to renewables doesn’t introduce more vulnerabilities into critical infrastructure, turning clean climate solutions into dirty national security liabilities. Australia is facing its next Huawei 5G moment, this time across the entire green transition. To safely modernise and decarbonise its critical infrastructure, the country needs sharper assessment, deeper due diligence and a unified national approach that considers not just emissions, but exposure.