EU green firms face high costs amid subsidy probe
Cutting Chinese supply can leave bloc with pricey turbines, analysts say
An anti-subsidy investigation into Chinese wind turbine manufacturers by the European Union could saddle the bloc’s renewable project developers with high costs and slow down their decarbonisation efforts, while the impact on Chinese firms could be limited, analysts said.
“Since the basis of the complaint is that the Chinese manufacturers are offering turbines that are too cheap and with overly attractive financing terms, removing that option can only result in European builders being left with options that are more expensive and with less attractive financing terms,” said David Fishman, a manager at power-sector consultancy The Lantau Group.
His comments followed an announcement by EU Commissioner Margrethe Vestager that an inquiry would be opened into the state subsidies received by Chinese suppliers of wind turbines. The investigation will initially cover “the conditions for the development of wind parks in Spain, Greece, France, Romania and Bulgaria”.
This is the third investigation targeted at China that has been initiated by the bloc under its new Foreign Subsidies Regulation, a tool adopted last year.
The previous two investigations targeted Chinese electricvehicle (EV) and solar panel manufacturers on suspicions that they were using state subsidies to undercut competitors in public procurement contracts.
EU policymakers “had better be very transparent and clear with their constituents that it’s a trade-off they’re comfortable with”, Fishman said.
China, the world’s largest wind power producer, has emerged as a major exporter of wind turbines in recent years, as global demand for clean power surges and its home market faces overcapacity in the clean-energy sector.
Like solar panels, EVs and lithium-ion batteries, China saw robust growth in exports of wind turbines last year.
According to data from the National Energy Administration, the country exported wind turbines worth more than US$33.4 billion to over 200 countries and regions last year.
Wind turbines produced by Chinese companies are 20 per cent cheaper than those made by competitors in the United States and Europe, according to BloombergNEF.
The investigation announced by Vestager on Tuesday is still at a preliminary stage.
Although further tariffs on Chinese wind turbine imports to the EU were possible, the impact of the investigation on Chinese manufacturers would be limited, Cosimo Ries, an energy analyst at think tank Trivium China, told the Post.
“The EU market is obviously by far the biggest outside China, so it would be a significant loss,” he said.
“But at the same time, these manufacturers don’t really live off of the EU market. So it’s basically just an opportunity cost that’s lost.
“At the same time, there are many big markets across the Global South that are starting to emerge.”
Southeast Asia, South Asia, Central Asia and Latin America would still be sizeable markets for Chinese wind turbine makers, where they had a clear advantage over European competitors because of low costs, Ries said.
Following Vestager’s announcement, shares of major Chinese wind turbine manufacturers fell yesterday.
Ming Yang Smart Energy Group dropped by as much as 4 per cent and Goldwind Science & Technology, the country’s top wind equipment maker, lost as much as 2 per cent.
There are many big markets across the Global South that are starting to emerge COSIMO RIES, ANALYST, TRIVIUM CHINA