On July 16, Italian renewable vitality developer Renexia announced that it was in superior talks with Mingyang, a Chinese language wind turbine producer, to produce an upcoming 2.8 GW floating wind farm. The venture, referred to as “Med Wind,” is positioned off the coast of Sicily and can make use of as much as 190 16.6 MW floating wind turbines.
This represents an enormous step for Mingyang, the publicly traded wind turbine authentic tools producer (OEM) based mostly in Guangdong. In 2023, Mingyang manufactured 9 GW of wind generators, placing it in fifth place globally based on BloombergNEF. The Bloomberg NEF evaluation indicated that in all of 2023, China-based wind turbine OEMs collectively commissioned 1.7 GW of wind tasks abroad. If accomplished, the Med Wind venture alone will prime that 2023 whole by 64 p.c.
Mingyang’s push into the Italian market comes as part of a bigger effort from Chinese language OEMs to increase into Europe. In 2022, Mingyang provided generators for a 30 MW offshore venture in Italy – the primary European offshore wind farm powered by generators from a Chinese language producer. Extra not too long ago, on July 2, 2024, Mingyang announced that it had entered an settlement to produce 16 massive 18.5 MW offshore generators to Luxcara, a German renewable vitality developer. The generators shall be put in within the German North Sea as part of “Waterkant,” a 300 MW offshore wind farm.
Chinese language wind generators have gained a foothold in Europe and different worldwide markets as a result of they’re low-cost. Analysis from Trivium China indicated that Chinese language turbine OEMs can produce generators for as little as one-fourth the price of their European counterparts. The result’s that in 2023, 4 of the 5 largest wind turbine OEMs had been Chinese language. Between 2018 and 2022, EU corporations’ share within the international wind turbine market fell from 55 percent to 42 percent, with China capturing nearly all of that market share. 2023 was one other exhausting 12 months for Western OEMs, with companies across Europe and the U.S. suffering financial losses.
In response to those developments, in April of 2023, the European Commission announced an inquiry into unlawful subsidies for Chinese language wind turbine OEMs. Approaching the again of the EU anti-subsidy probe into Chinese language made EVs, it looks as if European policymakers are attempting to get out forward of the potential incoming wave of low-cost, high-quality Chinese language wind generators.
Although Chinese language OEMs already management greater than 60 p.c of the worldwide wind turbine manufacturing market, that’s much less of a stranglehold than the over 90 percent control that Chinese firms enjoy in segments of the photovoltaic provide chain. Implementing tariffs now, whereas there are nonetheless highly effective European OEMs out there left to guard, would possibly protect home market share for European corporations.
The outcomes of the inquiry haven’t been launched, however the anti-subsidy probe and different investigations by the European Fee into Chinese language state help for personal business give hints of what may be to come back. In an April 2024 report titled “Commission Staff Working Document on Significant Distortions in the Economy of the People’s Republic Of China for the Purposes of Trade Defense Investigations,” the authors concluded that earlier analysis has “established the presence of serious distortions within the [wind turbine manufacturing] sector.” That signifies that the brand new inquiry into Chinese language-made wind generators is probably going to attract the same conclusion.
Even when the European Fee concludes that tariffs are vital, it isn’t clear how they are going to be structured. Within the case of EVs, the European Fee has established a sliding scale of tariffs starting from 17.4 percent to 37.6 percent, on prime of a preexisting 10 p.c obligation that was already in place for all electrical vehicles imported from China. According to the New York Times, the tariff ranges had been calculated based mostly on the extent to which Chinese language automakers complied with the probe.
This means that the identical staggered tariff construction may be used if the EU decides to impose a tariff on Chinese language wind generators. As a result of Mingyang is without doubt one of the few privately owned main Chinese language wind turbine OEMs, they could have extra latitude to work with the EU to face a decrease tariff stage.
These financial concerns are additional sophisticated by Europe’s bold local weather objectives. The EU must decarbonize its energy sector, and quick. The bloc achieved its 2020 goal of accelerating the share of renewable vitality use to twenty p.c, however faces an uphill battle to achieve the extra bold aim of 42.5 p.c renewable vitality use by 2030.
Amid this uncertainty, one factor is for positive: putting tariffs on Chinese language wind generators will make Europe’s vitality transition costlier. Given all of this context, evidently European policymakers and renewable vitality builders may be attempting to reap the benefits of this window of alternative earlier than any tariffs are levied to construct out their capability with low-cost Chinese language generators.
