Core Tip: Analysts at Wood Mackenzie have concluded that so far, Chinese suppliers have mainly focused on the domestic market, but there may be more competition internationally in the coming years.
According to report from the German "China Platform" website on March 29, due to the conflict between Russia and Ukraine, the EU hopes to accelerate the development of renewable energy. Among them, the wind power plays an important role. By 2030, the EU's wind power capacity should reach 480 GW. Before the Russian-Ukrainian conflict, the EU planned to have an installed capacity of 450 GW. As a result, the target has been increased by 30 GW more.
The report said that one might think that the European wind power industry will usher in a golden age. However, competitors from China are pushing further into the world market and could benefit from the expansion of wind power in Europe. As a result, European industry has warned of a possible loss of market share. However, there is no need to worry about a situation in which the German solar industry is completely displaced by competition from the Far East
The report pointed out that in recent years, China's wind power industry has developed rapidly. Half of the wind turbine components manufactured globally are produced in China. Six of the top ten manufacturers are from China. The value of European imports of wind turbines from China increased from 211 million euros in 2019 to 411 million euros last year. At the same time, European competitiveness is waning. Four out of five European manufacturers lost money last year. They are all closing factories and laying off workers.
The European wind industry appears to be facing the same fate as the solar industry. But it's too early to draw that conclusion. Two of the world's five largest wind power companies are from Europe, Vestas and Siemens Gamesa. Despite the increase in imports, Chinese companies have not yet consolidated their position in Europe. The largest part of China's huge output is used by China for its own large-scale wind power construction. But it's this massive expansion that scares Europe's wind energy industry. A strong domestic base can also drive international expansion. Chinese suppliers compete with unbeatable prices and are also catching up technologically.
The report pointed out that the huge domestic market is very beneficial to Chinese suppliers. "The huge production capacity gives China an important competitive advantage in the wind energy market," said Li Xiaoyang of Wood Mackenzie consultancy. The Industry representatives in Germany are also watching the development. Wolfram Axthelm, executive director of the German Federal Wind Energy Association, said: "In the Chinese market, Chinese manufacturers have reached the technical level of Europe. We have seen in the past how Chinese companies squeeze into the new market.
This industry in Europe is at a disadvantage compared to China because local demand is not high enough. In the world market, the market share of European industry has been taken away by China. The German Federal Wind Energy Association said Chinese suppliers were increasingly winning orders to build wind farms in Europe, such as in Italy, France, Croatia and Serbia.
The report also pointed out that while Chinese suppliers are strengthening their competitiveness, European companies are losing market share in China. Installations by foreign wind turbine makers in China are cut in half in 2021. It costs foreign companies to build onshore wind farms in China almost twice as much as domestic suppliers. Wind turbine prices in China will drop by 24% in 2021, according to Wood Mackenzie consultancy. The company expects their prices to drop by a further 20% in 2022.
The report believes that the improvement of competitiveness is conducive to the global expansion of Chinese suppliers. Analysts at consultancy Wood Mackenzie concluded that so far, Chinese suppliers have mainly focused on the domestic market, but there may be more competition internationally in the coming years.