Does Europe need Chinese wind technology to meet its climate goals?

In a plot of northern Serbia, the development of one of Europe’s largest wind farms is a testament to the region’s efforts to meet its clean energy goals. Yet the decision to choose a Chinese company to supply the turbines has raised concerns among domestic competitors.

Some fear that Italy’s 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 Europe’s solar industry, where Chinese companies have undercut domestic groups, forcing many to collapse.

Although Chinese manufacturers account for only a fraction of the EU’s €57.2 billion wind power market, Brussels has launched an investigation into whether Beijing groups are using unfair state subsidies to undercut prices to create a competitive advantage.

In April, European Competition Commissioner Margrethe Vestager accused China of repeating the “model” used in the broader cleantech sector, including heavy subsidies, 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 are convinced that this would be very, very bad news for the European wind market and for the European economy in general,” he added.

WindEurope, whose members include the region’s major wind turbine manufacturers, accuses Chinese manufacturers of offering prices 40 to 50 percent lower than their European competitors and allowing developers to defer payments. WindEurope says these prices are not possible without unfair government subsidies.

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

Luxcara project director Holger Matthiesen 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 selected Mingyang as its preferred supplier for its floating offshore wind project.

Other business leaders admit that lower prices could persuade them to turn to Chinese suppliers.

“We don’t have Chinese wind turbines, but if prices stay at these levels, I think more and more companies will start using them,” said Miguel Stilwell d’Andrade, chief executive of Portuguese wind developer EDP, 21% owned by China’s Three Gorges Power Corporation. “We will also consider them if they are more competitive.”

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

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

The Chinese, however, still have a long way to go to catch up with their European competitors. According to the Global Wind Energy Council (GWEC), major wind turbine producers Goldwind and Windey accounted for just 1% of the European market last year.

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

The Chinese Chamber of Commerce in the EU (CCCEU) insists that “the competitiveness of Chinese companies is driven by technological competition and intense competition, not by government subsidies.” It adds that the EU’s investigation into Chinese subsidies has sparked “deep dissatisfaction and concern.”

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

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

The GWEC, whose members include Chinese companies such as Zhejiang Windey and Mingyang, agreed that maintaining “fair and transparent business practices” was important in the face of EU measures to protect cleantech jobs from Beijing’s exports.

The moves, which include the EU’s investigation into subsidies, have fueled concerns that without Chinese technology the region could miss its carbon emissions targets. The EU has set ambitious climate goals that it says could cost €1.5 billion a year in investment.

“If we in Europe follow a relocation agenda, with import substitution and domestic production targets, we risk (…) slowing down the energy transition in Europe because everything would become a little more expensive,” said Simone Tagliapietra, a senior fellow at the Bruegel think tank.

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

Jonathan Cole, chairman of GWEC but speaking in his capacity as chief executive of global wind developer Corio Generation, agreed. Excluding Chinese companies from the global supply chain would “significantly hamper” the ability to meet decarbonisation targets, he said.

“A positive tax policy aimed at stimulating the growth of local supply chains is more likely to help us achieve our goals than a policy aimed at discouraging or excluding foreign suppliers,” he added.

Some European politicians also warn that Chinese companies face too many obstacles. “We want cheap and fast domestic production. We can only have two of these three options. We have to make a tactical choice,” said a senior European diplomat.