OWA Industry observation | Western wind giants "lost ground", or no chance to recover

01Wind power market reshuffle: Chinese manufacturers "take advantage" to enter Europe

From India to Brazil, many western wind turbine makers are quietly refocusing their strategies on restoring their financial soundness, a shift that has opened up a new competitive landscape. Analysts said the move may inadvertently pave the way for the rise of Chinese equipment manufacturers (Oems) in the European market, becoming a key part of the restructuring of the industry landscape.

Goldwind last month started production at a new plant in Camasari, Brazil, formerly owned by GE Vernova. This change is not only the change of assets at the enterprise level, but also the microcosm of the change of wind power industry trends. Andrea Scassola, vice president of wind power at Rystad Energy, noted that Western Oems are increasingly shifting their focus to Europe and the United States in order to reshape their financial structures, which can be seen in GE Vernova's decision to drastically cut staff and strive to become "light, efficient and profitable."

01Wind power market reshuffle: Chinese manufacturers "take advantage" to enter Europe

From India to Brazil, many western wind turbine makers are quietly refocusing their strategies on restoring their financial soundness, a shift that has opened up a new competitive landscape. Analysts said the move may inadvertently pave the way for the rise of Chinese equipment manufacturers (Oems) in the European market, becoming a key part of the restructuring of the industry landscape.

Goldwind last month started production at a new plant in Camasari, Brazil, formerly owned by GE Vernova. This change is not only the change of assets at the enterprise level, but also the microcosm of the change of wind power industry trends. Andrea Scassola, vice president of wind power at Rystad Energy, noted that Western Oems are increasingly shifting their focus to Europe and the United States in order to reshape their financial structures, which can be seen in GE Vernova's decision to drastically cut staff and strive to become "light, efficient and profitable."

Goldwind is one of the Chinese equipment makers that is expanding its global presence

Meanwhile, Chinese wind turbine makers are showing different ways of coping under pressure. Fierce price wars in their home markets have crimped their profitability, but they have also driven them to look to the international arena, once dominated by Western companies. WindEurope believes that the price of wind turbines provided by Chinese Oems is only about half that of similar products in Europe, which is an important weight of its competition and further aggravates the price competition situation in these markets.

02Which markets are Western Oems exiting?

Brazil has one of the world's largest onshore wind markets, but its wind industry faces competitive pressure from abundant hydropower resources. Faced with the severe challenges of "market reality", GE Vernova made the strategic decision to exit the Brazilian wind power market as early as 2022. Subsequently, Germany's Nordex also had to adjust its strategy to reduce the scale of its business in Brazil, although Brazil as the world's third continental wind power market, its market potential is huge, but the reality is still full of challenges. However, Denmark's Vestas bucked the trend and is currently expanding its Brazilian plant with plans to produce V163-4.5MW models.

At the same time as GE Vernova took over the Basaka Masari plant, another plant in Turkey operated by LM Wind, its Danish leaf manufacturing subsidiary, was also closed.

In India, Siemens Gamesa is trying to sell its wind turbine business, even getting into legal trouble over it. In 2019, Siemens Gamesa and Vestas had a 45 percent market share in India, while today that share has fallen to less than 5 percent. The main reason for this decline is the rise of Vision Energy as a dominant force, and the recovery of local Oems in India.

A leaf factory in India, Vision captured about 40% market share in India within a few years

Siemens Gamesa also closed its leaf plant in Morocco last year. Then, Chinese blade manufacturer Aeolon announced the construction of the first overseas MW-class wind turbine blade production base in the country, aiming to export to Europe and North America.

Compared to Western Oems, Chinese wind turbine manufacturers have shown a strong interest in the "edge" and high-risk markets, which is driven by China's policy orientation, financial support, cost control capabilities and the "Belt and Road" initiative, according to Joseph Webster, an expert on China offshore wind at the Atlantic Council's Global Energy Center.

03

Chinese wind turbine makers attract attention from Western developers

As Western manufacturers retreat, there are increasing opportunities for Chinese wind turbine manufacturers to work with European power giants. "Many of the most important asset owners are European companies that operate globally, and the markets that Western Oems are pulling out of are within their portfolio," said Rystad Energy's Scassola. Chinese wind turbine makers have "attracted the attention of Western developers" and formed "partnerships."

Webster pointed out that if Western developers work well with Chinese Oems in emerging markets, they will be more likely to work with them in Europe. "However, Western developers still choose Oems based on price, quality and reliability," he adds. "Networking is important, but it's not the main factor."

Paulo Almirante, Executive Vice President of Engie Group, presented Goldwind Chairman Wu Gang with the Renewable Energy Industry Performance Award earlier this year. Engie is using Goldwind turbines for a project in Egypt

Recently, Western developers have become more interested in Chinese wind turbines. EnBW, Statkraft and Iberdrola have all expressed a willingness to consider using Chinese equipment or praised the progress of the Chinese wind industry. Sven Utermohlen, head of offshore wind at RWE, also shared a photo of himself wearing a Mingyang wind hard hat on social media, showing him visiting the Mingyang plant.

However, barriers to entry in the European market remain high and the geopolitical and regulatory environment is complex. In strategic high-tech industries such as wind power, geopolitics plays a big role. To counter this, Western Oems are stepping up their lobbying efforts for political support. Last year, Europe launched the "wind power proposal" is one of the measures to enhance the competitiveness of European industry.

Scassola believes that while the road to recovery for Western Oems in non-European markets is challenging, Chinese wind turbine manufacturers with their cost advantages and global presence are poised to become the new leaders in these emerging markets.

Goldwind is one of the Chinese equipment makers that is expanding its global presence

Meanwhile, Chinese wind turbine makers are showing different ways of coping under pressure. Fierce price wars in their home markets have crimped their profitability, but they have also driven them to look to the international arena, once dominated by Western companies. WindEurope believes that the price of wind turbines provided by Chinese Oems is only about half that of similar products in Europe, which is an important weight of its competition and further aggravates the price competition situation in these markets.

02Which markets are Western Oems exiting?

Brazil has one of the world's largest onshore wind markets, but its wind industry faces competitive pressure from abundant hydropower resources. Faced with the severe challenges of "market reality", GE Vernova made the strategic decision to exit the Brazilian wind power market as early as 2022. Subsequently, Germany's Nordex also had to adjust its strategy to reduce the scale of its business in Brazil, although Brazil as the world's third continental wind power market, its market potential is huge, but the reality is still full of challenges. However, Denmark's Vestas bucked the trend and is currently expanding its Brazilian plant with plans to produce V163-4.5MW models.

At the same time as GE Vernova took over the Basaka Masari plant, another plant in Turkey operated by LM Wind, its Danish leaf manufacturing subsidiary, was also closed.

In India, Siemens Gamesa is trying to sell its wind turbine business, even getting into legal trouble over it. In 2019, Siemens Gamesa and Vestas had a 45 percent market share in India, while today that share has fallen to less than 5 percent. The main reason for this decline is the rise of Vision Energy as a dominant force, and the recovery of local Oems in India.

A leaf factory in India, Vision captured about 40% market share in India within a few years

Siemens Gamesa also closed its leaf plant in Morocco last year. Then, Chinese blade manufacturer Aeolon announced the construction of the first overseas MW-class wind turbine blade production base in the country, aiming to export to Europe and North America.

Compared to Western Oems, Chinese wind turbine manufacturers have shown a strong interest in the "edge" and high-risk markets, which is driven by China's policy orientation, financial support, cost control capabilities and the "Belt and Road" initiative, according to Joseph Webster, an expert on China offshore wind at the Atlantic Council's Global Energy Center.

03

Chinese wind turbine makers attract attention from Western developers

As Western manufacturers retreat, there are increasing opportunities for Chinese wind turbine manufacturers to work with European power giants. "Many of the most important asset owners are European companies that operate globally, and the markets that Western Oems are pulling out of are within their portfolio," said Rystad Energy's Scassola. Chinese wind turbine makers have "attracted the attention of Western developers" and formed "partnerships."

Webster pointed out that if Western developers work well with Chinese Oems in emerging markets, they will be more likely to work with them in Europe. "However, Western developers still choose Oems based on price, quality and reliability," he adds. "Networking is important, but it's not the main factor."

Paulo Almirante, Executive Vice President of Engie Group, presented Goldwind Chairman Wu Gang with the Renewable Energy Industry Performance Award earlier this year. Engie is using Goldwind turbines for a project in Egypt

Recently, Western developers have become more interested in Chinese wind turbines. EnBW, Statkraft and Iberdrola have all expressed a willingness to consider using Chinese equipment or praised the progress of the Chinese wind industry. Sven Utermohlen, head of offshore wind at RWE, also shared a photo of himself wearing a Mingyang wind hard hat on social media, showing him visiting the Mingyang plant.

However, barriers to entry in the European market remain high and the geopolitical and regulatory environment is complex. In strategic high-tech industries such as wind power, geopolitics plays a big role. To counter this, Western Oems are stepping up their lobbying efforts for political support. Last year, Europe launched the "wind power proposal" is one of the measures to enhance the competitiveness of European industry.

Scassola believes that while the road to recovery for Western Oems in non-European markets is challenging, Chinese wind turbine manufacturers with their cost advantages and global presence are poised to become the new leaders in these emerging markets.