The German engineering giant Siemens announced this week that it will use solar panels manufactured in China in the construction of several European solar power projects it is committed to.

The solar panels, assembled by China's Suntech Power Holdings, will be used instead of modules produced domestically. Though Germany is known as a hub of solar power innovation and is home to major producers of solar panel systems, the country's market has new competition in recent months as Chinese companies enter the European market.

Chinese solar panels are less expensive than those produced in Europe and the U.S. as manufacturing costs are lower and the Chinese government grants generous subsidies to domestic solar companies that produce the modules in the country. Germany is currently the world's top producer of solar power as the government there provides similar, though less generous, benefits.

Siemens is building photovoltaic arrays with a combined generating capacity of 80 megawatts, the company stated in a report. Moreover, its partnership with Suntech could extend to "other parts of the world," Jerry Stokes, the president of Suntech Europe, said in a statement.