The European Union’s sense of crisis about the current development of the local wind power industry is like the wind turbine made in China, which is getting bigger and bigger, and the wind turbine made in China is already as tall as the Eiffel Tower in Europe.
Recently, China’s Mingyang Intelligent Energy announced the launch of a 22 MW offshore wind turbine with a rotor length of more than 310 meters. The new wind turbines, which are expected to be developed between 2024 and 2025, will generate enough electricity in a single day at full capacity to power about 1,300 households for a month, Mingyang said. The new wind turbine is expected to be the most powerful offshore wind turbine in the world. Bloomberg described the fan as having “blades as long as the Eiffel Tower in Paris.” Previously, Mingyang has launched record-breaking offshore fans and onshore fans in terms of power and turbine diameter.
On October 24, the European Commission published the European Wind Energy Action Plan (hereinafter referred to as the “Action Plan”). In announcing the action plan, EU Energy Commissioner Simson said that in the past two years, the world’s largest wind power market has shifted from the EU to the Asia-Pacific region, and Europe’s wind energy industry is a version of a success story that should be continued. Although European wind equipment manufacturing covers everything from wind turbine manufacturing to component production, including blades and fan bases, local suppliers account for 85 percent of the European wind energy market, and even 94 percent in the offshore market. However, the crisis is that the market share of European companies in the global wind power equipment market has fallen from 42% in 2020 to 35% in 2022. In the Commission’s view, the decline in market share is largely due to the rapid development of the Chinese wind power market, which is largely dependent on a growing local manufacturing industry. Of the world’s top 10 wind turbine makers, which cover more than 80 per cent of global demand, four are from Europe and four from China, according to the planning document.
The European Commission summed up the plight of local wind equipment manufacturers. Among the internal factors, European manufacturers lack a comprehensive grasp of the wind energy construction plans of EU member states, which makes it difficult to plan production and investment, in addition, high inflation, rising raw material prices and rising interest rates have worsened the financial situation and financing situation of European companies. According to the German “economic weekly”, Siemens Energy, which is Mired in a serious loss crisis, is currently seeking government assistance of 15 billion euros from the German federal government. A spokesman for Siemens Energy said that the acceleration of the energy transition has led to an increase in demand for Siemens technology, and the current order book of Siemens has reached 110 billion euros. A long-term project of this scale would naturally require bank funding, but Siemens was less confident about securing bank loans because of the crisis at Siemens Gamesa, its wind-power equipment maker. In the second quarter of 2023, Siemens Gamesa’s wind equipment quality problems caused a loss of 1.6 billion euros, according to Reuters, the actual loss may be higher than that estimate. Siemens Energy expects to lose about 4.5 billion euros this year.
WindEurope, the European wind industry body, also spoke of the lack of investment in the European wind industry. Europe installed 2.1GW of new offshore wind in the first half of 2023, bringing the total offshore wind capacity to 32 GW, which is below the level necessary to meet Europe’s energy and climate targets, which must be pushed forward at an annual rate of 11GW of offshore wind turbine construction between now and 2030 or the target will be missed, the group said. However, there is insufficient investment in the offshore wind turbine supply chain in Europe. In WindEurope’s view, the underinvestment is in factories, labor and infrastructure, with a €9 billion investment gap in port infrastructure and an urgent need to build new wind turbine and cable plants. There are bottlenecks in the production of offshore fan bases and in the installation of fan vessels. The CEO of WindEurope said that the EU action plan is a game changer, and the fresh capital and the new EIB loan risk guarantee will stimulate investment in the European wind energy industry, thereby increasing the capacity of local wind turbines in Europe.
According to the Global Wind Energy Council (GWEC), Europe has around 30 GW of wind turbine capacity, covering 85% of domestic demand. But in the EU’s view, with growing wind power construction, European manufacturers must expand capacity to maintain their competitiveness, otherwise supply bottlenecks will either slow down wind power construction or lead to more imports.
It is possible imports that the EU is wary of. On the external factors causing difficulties for European wind power manufacturers, the European Commission believes that European manufacturers face increasing competition from China. In 2022, the EU’s trade deficit with China in wind power products reached a new high of 462 million euros, the action plan said. The more critical problem is not the European market at the moment, but the third market. China is not only an important supplier of raw materials and components to the EU and global manufacturers, but also an increasingly visible competitor to Europe in third markets. The plan points out that prices offered by Chinese manufacturers are on average 20% lower than those offered by European and American manufacturers, and coupled with deferred payments, Chinese wind power equipment is becoming more and more present in overseas markets. Moreover, because China’s dominance in steel manufacturing and raw materials has allowed Chinese manufacturers to benefit from vertically integrated business models, these have severely weakened the ability of European companies to compete fairly with Chinese companies. In its statement, WindEurope pointed directly at China, whose companies are starting to win orders in Europe by offering cheaper wind turbines and deferred payment terms, unfairly subsidized by the Chinese government.
In the face of difficulties, the action plan proposes a total of 15 actions, including financing, tender design and approval, the core of which is to stimulate local manufacturing. Analysts said that while the action plan calls for the principle of non-discrimination, the various designs reflect the EU’s high vigilance against Chinese wind power equipment manufacturing.
One plan is to protect the internal market from trade-distorting practices and threats to security and public order. The Commission encourages member States to use review mechanisms to exclude risks to critical energy infrastructure on the grounds of security and public order. The Commission will make full use of the cooperation mechanism under the FDI Review Regulation to prevent foreign investment from posing a possible safety and public order threat to the European wind energy sector. At the same time, the European Commission and the European wind industry are working together to closely monitor possible unfair trade practices that benefit foreign manufacturers, including a review of potential subsidies for wind energy related products imported into the EU, and the EU will also take measures under the Foreign Subsidies Regulation.
On October 6, the Financial Times reported that a leading EU official said the bloc was considering whether to investigate China’s use of subsidies to boost wind turbine manufacturers. According to a Reuters report on October 24, an EU official said that the EU currently lacks enough evidence to launch a formal investigation. However, in the EU institutions and the EU wind industry, there is no shortage of voices about the threat of Chinese wind turbines. The EU does not want to repeat the fate of the solar photovoltaic panel industry with electric vehicles, nor with wind power.