From Crisis Capital to Strategic Stakes: China in Europe’s Power Sector

China’s Quiet Stake in Europe’s Green Transition through Portugal

For much of the past two decades, Chinese overseas energy investments were easy to identify: large hydropower dams, coal-fired power plants, and transmission corridors appeared across Asia, Africa, and Latin America, often linked to bilateral agreements and development financing under the Belt and Road Initiative. These projects were highly visible and capital-intensive. However, a different model of engagement is now taking shape – quieter and less visible to public debate. One of its clearest expressions lies not in the Asia-Pacific region itself, but inside the EU’s renewable power system.

China Three Gorges Corporation (CTG) is a Chinese state-owned utility best known for operating the Three Gorges Dam, the world's largest hydroelectric power station by capacity. It has become the largest shareholder of Energias de Portugal (EDP) since purchasing about 21% of its stakes for 2.69 billion EUR in 2011. Rather than financing a single high-profile project, this investment embeds Chinese state capital within one of Europe’s most active renewable energy platforms – a company central to the expansion of wind and solar capacity across Southern and Western Europe. The relationship between CTG and EDP offers a revealing case study of how China’s outbound energy strategy is evolving across EU Member States and how the global energy transition is creating new, less visible forms of geopolitical influence.

The Regulatory Dividend: China's Strategic Interest in European Energy Markets

China is one of the world’s largest energy importers and plays a leading role in global oil and gas imports. There is a rising demand for energy which is driven by industrial upgrading, electric vehicles, and the rapid expansion of artificial intelligence and data centers. However, since the EU is not part of the top exporters of energy to China, nor does it sit astride global critical maritime chokepoints, it is not a traditional, high priority stakeholder in China’s energy geopolitics. Yet Europe’s energy transition offers something increasingly valuable: a testing ground for managing electrification in advanced, highly regulated economies.

EDP’s operations are directly exposed to the pressures of electrification in highly regulated markets. Its projects increasingly combine wind and solar generation, but also hydro-power – often paired with battery storage – to maximise output on constrained grids. The company also operates across multiple regulatory regimes, providing exposure to different market designs, pricing mechanisms, and approaches to public acceptance in the EU. For a Chinese state-owned entity such as CTG, this exposure has strategic value. It offers experience in markets with high renewable penetration, strong regulatory oversight, and politically sensitive debates over energy costs and land use. 

Crisis Capitalism: How Portugal’s Debt Emergency Opened the Door

CTG’s acquisition of a stake in EDP was a crisis-driven opportunity seized at a time when no European buyer could match its offer. As Portugal was hit by the Eurozone sovereign debt crisis (2010–2014), years of high public debt, weak economic growth, and fragile banks made investors lose confidence, forcing the government to seek an international bailout and sell state assets, including EDP. During the privatisation of EDP, most European utilities were themselves financially constrained by the crisis and austerity, while CTG offered the highest cash bid and a long-term strategic investment when others could not. In 2011, CTG acquired its stake in EDP paying 2.7 billion EUR during Portugal’s eurozone crisis. At the time, while Portugal was under high pressure to raise capital, foreign investment was welcomed, and concerns over strategic infrastructure ownership were far less pronounced than they are today.

However, China was not the first foreign investor to acquire stakes in EDP. Since the late 1990s, Portugal had pursued a gradual transition from state ownership toward market-based ownership, selling shares through successive rounds of privatisation to institutional and private investors. In 2011, China’s CTG acquisition represented the final and largest tranche in a long shift from state control to market ownership. While EDP remains governed by EU corporate law and energy regulation, Chinese equity ownership still matters, since it shapes EDP’s long-term strategy, capital allocation priorities, and tolerance for regulatory and market risk. There are no bilateral memoranda of understanding, no Chinese engineering contracts, and no state-backed loans tied to project delivery. Beyond EDP, China’s presence in the board discussions and strategic oversight of EDP is a reflection of its embedded, financial, and long-term presence in the EU energy market. A second shock reinforced these stakes more recently: the energy crisis sparked by Russia’s full-scale invasion of Ukraine in 2022 exposed Europe’s vulnerability to fossil fuel supply disruptions and dramatically accelerated the urgency of renewable build-out and energy security, making long-term equity positions in clean-energy platforms all the more consequential.

From National Utility to Global Renewable Platform

Since CTG acquired its stake in 2011, EDP has transformed from Portugal’s largest producer and distributor of electricity into a major European renewable energy developer. Its core markets in the EU include Spain, Germany, Portugal, Italy, and France – countries that sit at the center of the EU’s decarbonisation strategy. EDP has also grown not only in market capitalisation – growing from about 11.5 billion EUR to roughly 18 billion EUR today – but also in the scale of its renewable energy business. Through its subsidiary EDP Renováveis, the company operated more than 27 GW of renewable capacity worldwide in 2024 – the vast majority from wind and solar – making it one of the largest global renewable developers. This expansion includes large utility-scale projects, such as multi-hundred-megawatt wind farms in the U.S. and new solar parks across the Iberian Peninsula. Together, these developments illustrate a structural shift from a regional utility toward a globally diversified clean-energy company.

Not an Isolated Case: China’s Expanding Footprint in Europe’s Power Sector

The EDP–CTG deal was part of a broader wave of Chinese entries into European energy infrastructure during the early 2010s. After Portugal allowed Chinese state firms to acquire major stakes in EDP (2011) and in its grid operator REN (2012), Italy followed a similar path in 2014. The Italian state lender Cassa Depositi e Prestiti sold a 35% stake in its energy holding company to China's State Grid. The deal gave Beijing indirect exposure to Italy's gas and electricity backbone – including stakes in Snam, Terna and Italgas – demonstrating how Chinese capital was entering Europe's energy system through financial partnerships rather than direct takeovers. Later in 2017, Greece followed with the sale of a stake in ADMIE to China. Unlike EDP, which is primarily an electricity producer and renewable energy developer operating in competitive markets, ADMIE controls Greece's transmission grid – a regulated monopoly that manages the physical backbone of the power system, making it far more sensitive from a national infrastructure and security perspective.

One of the key turning points in EU investment screening policy was in 2018, when Germany intervened to block State Grid Corporation of China from buying into 50Hertz Transmission, signaling a shift toward greater protection of strategic infrastructure. Together, these cases show how Europe moved from crisis-era openness to a more cautious and coordinated approach toward foreign ownership of critical energy infrastructure. The most concrete recent expression of this came in December 2025, when the European Parliament and Council reached political agreement on a revised FDI Screening Regulation, building on the Commission's legislative proposal of January 2024. The revised framework goes significantly further than its 2019 predecessor: it makes national screening mechanisms mandatory across all 27 Member States and establishes a common minimum scope of sectors where screening is always required — explicitly including critical entities in energy infrastructure. This tightening is also reshaping how Chinese firms engage with European energy markets: instead of pursuing equity stakes in utilities or grid operators, some are now turning to on-the-ground industrial investment instead. The Chinese solar equipment manufacturer Sungrow, for example, announced plans in early 2026 to build its first large-scale manufacturing facility in Poland, producing inverters and energy storage equipment for the European market — a model that currently sits largely outside the perimeter of FDI screening. As the EU Institute for Security Studies noted in January 2026, Chinese state-linked companies retain significant equity stakes in transmission system operators across Portugal, Italy, Luxembourg, Malta, and Greece — positions acquired before such scrutiny existed — while more recent attempts to acquire stakes in grid operators in Spain, Germany, and the United Kingdom have been blocked on national security grounds. The revised regulation, once in force, would close the gap that made such legacy positions possible in the first place.

Conclusion 

The CTG–EDP case shows how foreign state capital can become embedded in Europe's energy transition, not through headline infrastructure projects, but through long-term equity positions inside major companies. Many of these partnerships were born out of the extraordinary pressures of the Eurozone financial crisis, when sovereign debt turmoil and constrained credit markets left governments and energy companies scrambling for capital – a gap that Chinese state investors were willing to fill, thus stabilising utilities that might otherwise have faced deeper distress. At the same time, the nature of Chinese engagement is itself evolving: alongside legacy financial stakes, Chinese firms are increasingly pursuing on-the-ground industrial investment in European markets, from manufacturing facilities to equipment supply chains, extending their footprint beyond pure equity ownership.

Since the early 2010s, the European Union has responded by strengthening its regulatory toolkit, including the 2019 EU Foreign Direct Investment Screening Regulation and more stringent national screening mechanisms targeting strategic energy assets. At the same time, new industrial and climate policies such as the Net-Zero Industry Act and the REPowerEU plan depend on massive capital inflows to accelerate renewable deployment, grid expansion, and supply-chain resilience. Europe, therefore, faces a structural tension rooted in its recent history: tightening scrutiny over foreign ownership while simultaneously requiring unprecedented investment to meet decarbonisation and energy security targets. How policymakers manage this trade-off – balancing openness to external capital with strategic autonomy – will shape the openness of Europe's energy markets and its relationship with external investors, including China, in the decade to come.

The views expressed in this article belong to the author(s) alone and do not necessarily reflect those of European Guanxi.

ABOUT THE AUTHOR

Audrey Berder is Director of China Affairs at the French Institute of Eurasian Affairs (IFME), where she leads the Eurasian Critical Minerals Project. She holds concurrent roles as Executive Researcher, Podcast Lead, and Board Treasurer at European Guanxi, and is the author of the Substack publication The Chessboard Café. She is also the founder of Stratum, a geopolitical intelligence platform that tracks EU’s Critical Raw Material Act’s (CRMA) progress — covering leading EU mining companies, EU mining partnerships, global supply chain risks, deep sea mining zones, and policy developments.

This article was edited by Daria Bogolyubova and Steafno Bertoli.

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