Blowing into Italy

Chinese turbines now in the Med

Europe’s largest wind-turbine manufacturers fear an easterly storm as China’s largest players start to finish their first projects on the continent. If the example of Italy’s Beleolico project is instructive, their concerns could be well founded.

Renexia, the renewables arm of Italian infrastructure firm Toto Holdings, inaugurated a 30-megawatt (MW) project off the port of Taranto in Apulia province in April. The offshore wind turbines come from Ming Yang Smart Energy in what represents its first installation in Europe, reports the Wall Street Journal.

But it was not supposed to be this way. Renexia’s original agreement was with Germany’s Senvion. However, the wind turbine manufacturer collapsed in 2019, in large part because of the end of various government subsidies. This predicament has not been lost on Western players such as General Electric, Siemens Gamesa and Vestas. In February they were signatories to a letter imploring the European Commission to act, because they are “losing ground as Chinese manufacturers expand across Asia, South America and Africa”.

The US-based Rhodium Group says that energy regulators in Europe also need to start thinking more strategically. In a report published this month it argued that although “Europe’s oil and gas dependence on Russia is the more immediate chokepoint, its reliance on China for the energy technologies of the future poses a similar problem.” The study says that European policymakers need to make their energy supply chains more immune to potential deteriorations in relations with China and that they should prioritise business-friendly policies that boost the competitiveness of domestic firms.

Philip Totaro, founder and chief executive of renewables intelligence firm IntelStor, told the Wall Street Journal recently that Chinese wind turbine makers are well-positioned to displace Western rivals because of “their cheaper production costs and availability of raw materials such as steel and rare earths”.

Ming Yang in particular has also been a pioneer of hybrid turbines, which are smaller in size and require less steel, iron, copper and rare earths in production. Credit Suisse analyst Sabrina Shao says she expects this to help the company increase its penetration and “enjoy a first mover advantage”.

The BloombergNEF rankings show how quickly things can change in the industry. In 2020 Siemens Gamesa topped the global rankings for offshore wind installations, a position it had held since 2017. But last year it dropped to sixth place with China’s four largest manufacturers taking the top four spots, led by Shanghai Electric, followed by Ming Yang, Xinjiang Goldwind and CSSC Haizhuang.

Vestas, a Danish firm, clung on to a top-five position and is still number one globally for onshore installations (where Goldwind ranks second and Siemens Gamesa third).

The impressive showing from Chinese companies is the result of an unprecedented expansion of offshore wind capacity domestically, in part to take advantage of national subsidies before they ended. In 2021 16.9 GW of offshore wind capacity was added, more than the rest of the world combined over the previous five years. In doing so, the Chinese have leapfrogged the UK in offshore windpower, reaching a total of 26.4 GW. The consultancy Wood Mackenzie forecasts that within the next 10 years China could reach 88 GW of capacity, staying well ahead of the UK, which is planning to install 50 GW by 2030 (more than enough to power every household in Britain, the government reckons).

Ming Yang hopes to capitalise on this expansion by becoming the first Chinese turbine maker to establish a physical presence in Europe. In December it signed an agreement with the British government to build a blade manufacturing and turbine assembly plant in the UK, and it has also established an engineering centre in Hamburg. Ming Yang’s turbines are already well-suited to the blustery North Sea between the UK and mainland Europe, adds BloombergNEF. The company’s design expertise is also challenging the view that the Chinese market “lags in technological development and signals to Western turbine makers that a new competitor is eyeing the European market”.

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