Europe was once the world’s leader in producing the wind energy increasingly needed to power the world for decades to come. But persistently high inflation, supply chain bottlenecks, and hold-ups in getting permits have local manufacturers fearing Chinese producers could eventually unseat them.
Beijing is fueling this anxiety with favorable loans and other sweeteners for local manufacturers that have dramatically dropped the prices of making wind turbines — some as big as the Eiffel Tower — in China.
“In the space of two years, Europe has lost its leadership as the largest world market for wind to the Asia Pacific region,” said EU Energy Commissioner Kadri Simson as she presented the package on Tuesday in Brussels. “Now this trend starts to be visible also here in the EU.”
That’s why the EU this week unveiled a battery of measures intended to reverse this trend. The initiative will give homegrown wind energy firms easier access to financing and raise scrutiny of foreign subsidies for wind energy-related imports coming into the EU. It also includes a proposal that would favor EU manufacturers when handing out state subsidies for wind projects.
It’s a package industry leaders are championing and politicians say is necessary to prevent Europe from relying on China for the wind energy of the future. But the effort also raises knotty issues for Europe. Already, the Continent is well behind on meeting its wind energy targets and cheap Chinese wind turbines could help make up ground. But with Beijing an increasing irritant to the West, European officials are also loath to put their green energy future in China’s hands.
“If we don’t protect our industry today, we will end up serving an entire sector to China on a silver plate,” said Danish MEP Morten Helveg Petersen, the European Parliament’s lead lawmaker on offshore renewables.
Falling behind
The EU wants to boost the share of renewables in its energy mix to 42.5 percent by 2030 — up from just a fifth in 2021 — and is hoping to produce 36 gigawatts of Europe’s wind capacity locally by that point.
It’s a tall order.
In the first half of this year, the EU installed just 1.3 GW of new offshore wind capacity — far short of the 11 GW it theoretically needs to add annually to reach its goals.
The Continent is also 10 GW behind in its homegrown manufacturing goals, according to WindEurope, even if 85 percent of the EU’s wind energy market is still supplied by local producers.
As a result, experts are now arguing the EU is on track to miss its 2030 targets.
Much of the problem is that developers are struggling to repay debt on long-term contracts as interest rates spike and they wait for permits. Manufacturers are also facing surging costs on raw materials like copper and supply chain logistics.
That’s hitting some of Europe’s wind champions hard.
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Turbine manufacturer Siemens Energy, a company spokesperson said, is in talks with the German government in a bid to secure billions in state guarantees amid mounting losses and difficulties dealing with banks nervous about the wind sector’s health.
Fierce competition with Chinese wind manufacturers is compounding the problem.
Beijing’s wind sector benefits from cheap state-backed loans and long-term deferred payments, meaning Chinese turbines can be produced for half the price of those made by their European and U.S. counterparts, said Antoine Vagneur-Jones, an analyst at BloombergNEF.
With China’s turbines winning contracts across a dozen or more countries worldwide, that’s now a “real threat” to EU producers’ historical global dominance, he said.
That said, analysts say there’s still time for the EU to reverse the trend lines. Chinese firms may not become competitive in the EU until “the second half of this decade,” Vagneur-Jones said, even if some are starting to win orders for turbines in countries like Serbia.
That’s why the EU insists Europe must act swiftly. The package of measures and proposals it released this week, dubbed the “European Wind Power Package,” is designed to improve how governments bid out wind energy contracts and promise wind firms new EU cash. It would also grease the wheels for local manufacturing permits.
“The wind industry is a European success story,” Simson told reporters, “and it must remain so.”
Industry leaders hailed the move. Giles Dickson, CEO of the WindEurope industry group, called the offerings a “game changer.” He argued that the pledges of fresh cash and new credit risk guarantees from the European Investment Bank for wind investors would “unlock the private investments that are needed.”
Taken together, he insisted, the incentives “will help us deliver the volumes that the EU wants us to build,” he said.
Confronting China
While China is rarely mentioned in the EU’s text, the country is looming over the entire effort.
In addition to the attempts to juice local wind projects, the European Commission is also proposing that countries only offer EU money or government cash to wind firms that comply with certain sustainability, cybersecurity and labor standards — criteria would likely lock out China.
Although the EU executive insists the rules would be “non-discriminatory,” they are, in effect, “all tailored to avoid relying on China,” according to Vagneur-Jones.
Yet the Commission has thus far stopped short of taking a more explicit step against China: Opening an official investigation into whether the country’s support for its own wind firms constitutes an unfair trade practice.
Looming over the decision is some fraught history.
Earlier this month, the EU launched a similar probe into Beijing’s support for homemade electric vehicles — a decision that generated fury from Beijing. Further back, the EU tried to hit China with solar tariffs to forestall the country’s rise in that key energy sector. The standoff ended with the EU backing down — and subsequently losing its global edge on solar production.
Opening a new probe into Beijing’s wind industry would require evidence that “imports benefiting from those subsidies are causing economic harm to European production,” said one Commission official, who was granted anonymity to speak candidly.
Petersen, the Danish MEP working on offshore renewables, wants the EU to take that step, and not relent.
“The threat from China is very real,” he said, “and we need to ensure a level playing field to avoid Europe’s wind industry suffering the same destiny as our solar power industry.”