SOS of the European wind industry: "The sector is relocating at an accelerated pace"

2023-09-21T13:58:27.541Z

Highlights: WindEurope calls to "not trust" the supply of wind turbines in a single supplier, in reference to China. European Commission President Ursula von der Leyen announced a support package for wind energy last week. Around a quarter of a million jobs across the continent depend on the wind industry. China's wind turbine design and manufacturing industry is facing a reality similar to the one that led to the virtual demise of PV factories decades and a half ago. "We are losing a lot of suppliers: bankruptcies are continuing," says the CEO of Nordex Acciona.

The new dome of the employers in Brussels calls to "not trust" the supply of wind turbines in a single supplier, in reference to China, and recalls the damage of dependence on Russian fuels

Several offshore wind turbines, off the coast of Viana do Castelo (Portugal). VIOLETA SANTOS MOURA (REUTERS)

European wind turbine manufacturers raise their voices to warn of profitability problems throughout their supply chain and the consequences that this situation could have for a fundamental sector for the decarbonization of the Old Continent. "We are losing a lot of suppliers: bankruptcies are continuing. It has taken a lot of effort to build a sector that, unfortunately, is relocating at an accelerated pace, "says the CEO of Nordex Acciona and new president of the continental wind employers, José Luis Blanco, in his first interview after taking office this Thursday. "The disappearance of companies throughout the chain is not a risk: it is a reality. We need to return to profitability in order to help European energy independence and be a useful sector for Europe's energy security."

Is it an SOS? "Yes, somehow yes, if no legislative action is taken. The sector is in losses and cannot be financed continuously with money from its shareholders: it has to be profitable, and for that it needs volume and a stable framework to be able to compete, "says Blanco to EL PAÍS while calling for a "deep reflection". "Europe's energy dependence on Russian energy resources has brought us here, and policy must take diversification into account and not put all eggs back in the same basket [China]. We cannot rely on a single supplier of anything, neither energy nor components for renewable energy," he warns.

Europe's wind turbine design and manufacturing industry, on which around a quarter of a million jobs across the continent depend, is facing a reality similar to the one that led to the virtual demise of PV factories decades and a half ago: their Chinese competitors – up to 50% cheaper, according to WindEurope itself, and with generous public support schemes, they have not stopped winning orders in recent times. And they have deepened the deterioration of the income statements of the main names in the sector – among them, the Spanish-German Siemens Gamesa and Nordex Acciona itself – already weighed down by the rise in the price of raw materials and financing conditions, increasingly strict with the unstoppable rise in interest rates. Its red numbers also contrast with the growth prospects of this technology in the coming years, in which the Twenty-seven will have to meet increasingly demanding decarbonization objectives.

Underutilized factories and losses

"Our industrial capacity is underutilized," says Blanco. "Contrary to what it might seem, in the midst of the biggest energy crisis of the century, Europe has installed less than in the past. There is a decoupling between the medium and long-term objectives, which are very good and have increased, and what is being delivered in the short term. Europe not installing at the speed at which it should to achieve the targets of 42% [of renewable generation] in 2030. And that leads to underutilization of factories and losses."

Although he acknowledges that the sector is at a "critical moment", the new president of WindEurope, believes that "finally" the public authorities begin to "understand" the situation. "Now, energy and industrial security and independence are one on the political agenda, and many countries are already taking action." All that remains is to align "the priorities of companies, society, the European Commission and the Member States" is aligned. Among its main demands is the improvement of the design of the market and the acceleration of permits, "which is the main bottleneck to attract demand."

Last week, European Commission President Ursula von der Leyen announced a support package for wind energy, with an acceleration in permits or an improvement in auction systems. And he stressed the importance of the future of the sector continuing to be written in the Old Continent. At WindEurope, however, they still do not have the fine print of these measures.

Race for courage

"What we ask is to move from a race for the least value to a race for value," said Alfredo Parres, head of renewables at Hitachi Energy and new vice president of WindEurope. "We must defend a powerful European industry, choosing the actors that meet a minimum of criteria depending on where they manufacture or safety. I think we have a good technological background, and now we have to think about how to take it to the scale necessary to make it competitive."

Parres, who describes as "delicate" the situation that the sector is going through today, far from the "upward curve that we all expected", says he has "no doubts about future demand, due to sustainability and electrification commitments, but about the speed and ability to develop a supply chain that allows us to support all this". "We are talking about an industry and a technology that was born in Europe: we cannot forget this factor"

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