Brussels launches scheme to aid beleaguered wind turbine makers

The European Commission has put forward a package of non-binding measures designed to aid the bloc’s beleaguered wind turbine makers, who are under pressure from cheaper competitors abroad.

Europe is considered the continent where “wind power was born and raised”. Thousands of wind turbines are installed every year, engineered by a complex web of turbine producers and project developers. That ecosystem is under pressure as turbine producers keep posting operating losses.

“We want wind power to continue to be a European success story, both from an energy and industry perspective,” said Commission Vice-President Maroš Šefčovič while presenting the wind power industry action plan on Tuesday (24 October) in Brussels.

While solar panels are largely produced abroad, European companies have managed to hold onto a large part of the market share in the wind industry. For a Europe seeking to go green while at the same time conducting industrial policy, that is a perfect mix.

But there is trouble in paradise.

Turbine makers and project developers – faced with a triple-whammy of spiking commodity prices, rising interest rates, and stark competition from abroad – are not in a great place. 

All the bloc’s turbine makers, but especially Siemens Gamesa and Denmark’s Vestas, Europe’s biggest, are consistently posting losses. Then there are project developers, who chafe under bureaucratic strain, lawsuits by environmental groups and NIMBYs and are being outmuscled by oil majors moving into renewables.

So, Brussels wants to help keep out the home team’s competitors and speed up the roll-out of wind turbines by tightening permitting procedures and providing extra financing via the bloc’s banks. The European Investment Bank (EIB), for example, will offer de-risking guarantees to wind projects.

“The new actions on finance, auctions and permitting will speed up the development of wind farms,” said WindEurope’s CEO, Giles Dickson.

Capacity auctions

And there’s more to wall off Europe from would-be competitors, particularly China. The Commission suggests an overhaul of the capacity auctions, initially designed to keep prices for consumers as low as possible.

“We want to improve the auction system,” explained Energy Commissioner Kadri Simson. The Berlaymont proposed that EU countries block auction participants using “environmental, sustainability and cybersecurity requirements” to select “qualified contractors for participating in auctions”.

The idea is to advise governments to adopt “non-price award criteria which reward higher value added products and promote industrial scale-up that can better support an innovative and competitive wind manufacturing industry”, the plan states. 

That could ultimately mean anything from controversial local content rules – where a share of parts must come from Europe – to ecosystem impacts. In effect, that means Brussels is kicking the ball back into EU countries’ court, who must now decide what to do with the EU’s advice.

Contrary to industry hopes, accounting for these “qualitative criteria” will not be mandatory. The package marks another milestone in the industry’s fight against competition purely on price.

Beleaguered wind industry turns to European governments for help

While European governments boost their wind power ambitions, the industry is struggling with rising production costs and growing competition from China.

Surprise cyber-criteria

But one special provision could prove much more impactful than one would assume: the cyber criteria. 

Russia’s attack on Ukraine – and the accompanying cyber warfare – had one rather unexpected consequence, in Germany of all places: thousands of wind turbines were taken offline by a suspected Russian hack of a satellite handling both wind turbines and Ukraine’s military data.

To prevent something similar in the future, future auctions should be designed to account for “cyber resilience”, e.g. how many different servers data is stored on, whether there are backup systems in place and the like.

And then there’s the most sensitive aspect: cybersecurity criteria. Wind turbines, while generating power, collect heaps of data. Modern models boast some 300 sensors generating all kinds of data, including camera footage to avoid potential swarms of birds.

Much like with the ongoing discussions around 5G infrastructure, there is a persistent worry that embedding Chinese technology – despite its obvious cheapness – into Europe’s foundational infrastructure could cause problems down the line.

Whether this actually occurs will be up to EU countries, who must now engage with the suggestions from Brussels.

[Edited by Nathalie Weatherald]

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