After years of crisis, the wind industry is feeling a resurgence. On the one hand, this is due to a changed political framework: the EU has set as its priorities the energy transition, energy independence and climate protection.
On the other hand, it is due to the indisputable competitiveness of wind energy. Onshore wind power is by far the most cost-effective form of electricity generation today, also thanks to continuous efficiency improvements and innovations by manufacturers. Both factors contribute to the fact that the prospects for our industry have never been better. Double-digit growth rates for the European markets are expected in the coming years.
However, the positive outlook should not overshadow the fact that European manufacturers still face significant challenges. Independent of the increasing demand, the competitive pressure from heavily subsidised wind turbines from the East and West is growing.
China provides massive financial support to its domestic manufacturers and grants them unrestricted direct access to critical raw materials such as rare earths. Under the Inflation Reduction Act (IRA), the US also subsidises the production of wind turbines in their own country at $160,000 per megawatt.
This leads to a massive distortion of competition that European manufacturers currently cannot counter. In a market that only focuses on the lowest prices, this inevitably leads to the exodus of companies, which shift their production to ‘best cost’ countries for competitive reasons.
However, it cannot be in the European interest to also surrender the wind industry after losing the solar industry.
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But it’s not just 300,000 jobs in Europe at stake. Something far worse looms if policymakers continue to leave everything to market forces and do not improve the market design.
Chinese competitors are forming alliances to attack the promising European onshore market. Project developers report aggressive offers from Chinese manufacturers that are up to 30% below the prevailing market price.
In addition, Chinese competitors, bolstered by government support, operate with unethical financing models (manufacturers grant full advances, and customers pay only years later after the entire wind farm is commissioned). European manufacturers, who must do their calculations without government subsidies and have just undergone a tough restructuring due to the [recent] market collapse, cannot compete with such financial practices and are out of the race.
Without political intervention, the European onshore wind market will soon be in Chinese hands and Europe will be [subject to] its next energy-policy dependency. Chinese wind turbines would replace Russian gas. Such a scenario was certainly not intended when Europe detached itself from Russia in terms of energy.
European manufacturers are rising to the challenge of competing through innovation, quality, and performance. However, systemic competitive disadvantages can only be addressed by politics: it must sharpen the existing market design!
If we value sustainable and independent energy supply in Europe, the added value of European production compared to subsidised wind turbines from the East and West must be recognised. Specifically, ‘Made in Europe’ must be rewarded in tenders to offset competitive distortions and ensure equal opportunities for European market participants.
Europe must prioritise organising the supply of clean tech components domestically. Ultimately, it is about preserving production capacity in Europe and securing it for the future. We need a ‘level playing field’ that ensures equal opportunities for market participants, punishes price dumping, and preserves Europe’s energy security and independence for the future.
Jürgen Zeschky is CEO at German wind turbine manufacturer Enercon