Does Europe need Chinese wind technology to meet climate goals?

On a plot of land in northern Serbia, the development of one of Europe’s largest wind farms is a sign of the region’s efforts to meet clean energy goals. However, the decision to choose a Chinese company to supply the turbines has caused alarm among domestic rivals.

Some fear that Italian company Fintel Energia’s use of Zhejiang Windey to supply turbines for the Maestrale Ring wind farm is part of a growing trend that threatens to repeat the problems of the European solar sector, where Chinese companies have undercut domestic groups on prices, forcing many into bankruptcy.

Although Chinese producers represent only a fraction of the €57.2 billion European wind energy market, Brussels has launched an investigation into whether Beijing groups are using unfair state subsidies to undercut prices and gain a competitive advantage.

In April, European Competition Commissioner Margrethe Vestager accused China of repeating the same “playbook,” including large subsidies, in the broader cleantech sector that it used to dominate the solar panel industry.

Pierre Tardieu, policy director at trade group WindEurope, which represents 550 renewable energy groups in the region, fears a “tipping point” where Chinese companies will begin to dominate the European turbine market, currently led by Denmark’s Vestas and Germany’s Siemens Gamesa.

“We strongly believe that this would be very bad news for the European wind market and for the European economy as a whole,” he added.

WindEurope, whose members include the region’s big turbine makers, says Chinese manufacturers are offering prices 40-50 percent lower than European rivals and allowing developers to defer payments. It says these prices are not possible without unfair government subsidies.

Last month, German asset manager Luxcara selected Mingyang, China’s fourth-largest wind turbine maker by market share in 2023, as its preferred turbine supplier for an offshore wind project.

Holger Matthiesen, director of the Luxcara project, said the models were “the most powerful in the world” and that the deal would help the company “accelerate Germany’s energy transition.”

In the UK, Swedish cleantech group Hexicon has also chosen Mingyang as its preferred supplier for its floating offshore wind project.

Other company executives admit that lower prices might persuade them to turn to Chinese suppliers.

“We don’t have Chinese turbines, but if prices stay at this level, I think we’ll start to see more companies using them,” said Miguel Stilwell d’Andrade, chief executive of Portuguese wind developer EDP, which is 21 percent owned by China’s Three Gorges Power Corporation. “We’ll consider them even if they’re more competitive.”

Ignacio Galán, chief executive of Spanish utility Iberdrola, added that the company tends to focus on local suppliers, but if Chinese manufacturers “produce reliable and competitive turbines, we would be open to considering them as potential suppliers.”

Additionally, analysts at Aegir Insights say that a 250-megawatt floating offshore wind farm off the coast of Brittany, France, may not be feasible without cheaper turbines, likely Chinese or made outside Europe.

However, the Chinese still have a long way to go to catch up with their European rivals. Major turbine makers Goldwind and Windey accounted for just 1 percent of the market share in Europe last year, according to the Global Wind Energy Council (GWEC).

Mads Nipper, chief executive of Danish wind and solar farm developer Ørsted, played down fears of a Chinese threat to domestic turbine makers when he told the Financial Times earlier this year that they were unlikely to gain significant market share in Western Europe.

The China Chamber of Commerce in the EU (CCCEU) insists that “technological competition and intense competition, not state subsidies, drive the competitiveness of Chinese companies.” It added that the EU investigation into Chinese subsidies has sparked “deep dissatisfaction and concern.”

Chinese lawmaker Zhejiang Windey supported the House, saying there were no “unfair and implicit state subsidies.”

He added: “We also demand a fair, open and transparent wind market, without being manipulated by any single party. We just want to contribute to the global energy transition, with our experience and technology.”

The GWEC, which counts Chinese companies including Zhejiang Windey and Mingyang among its members, agreed that maintaining “fair and transparent trade practices” was important in the face of EU measures to protect cleantech jobs from Beijing’s exports.

The measures, which include investigating EU subsidies, have fueled concerns that without Chinese technology the region might miss its carbon targets. The EU has set tough climate targets that it estimates could cost €1.5 trillion a year in investments.

“If in Europe we follow a reshoring program, with import substitution and domestic production objectives, we risk [ . . .] slowing down the energy transition in Europe as everything would become a bit more expensive,” said Simone Tagliapietra, senior fellow at the Bruegel think-tank.

“Instead of going against gravity and beating the Chinese or trying to compete with the Chinese on the economies of scale that they have built, we would be better off focusing on an innovation-driven industrial policy.”

Jonathan Cole, chairman of GWEC but speaking in his capacity as CEO of global wind developer Corio Generation, agrees. Cutting Chinese companies out of the global supply chain would “significantly hinder” the ability to meet decarbonization goals, he said.

“A positive fiscal policy designed to stimulate the growth of local supply chains is more likely to help us achieve our goals than a policy designed to discourage or exclude foreign suppliers,” he added.

Some European politicians also warn of too many barriers to Chinese companies. “We want cheap, fast and quality domestic production. We can only have two of those three. We should make a tactical choice,” said a senior EU diplomat.