# Global Wind Market Shifts as Chinese Exports Expand

An episode of [Switched On](https://invisiblenetwork.ai/podcast/1469286286), 6 Feb 2025, 31 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/01a10738-3608-4dec-883c-ae3c00026b36/ecfe6e21-6f6c-42c3-b7e4-b27c00a195fa/audio.mp3?utm_source=Podcast&in_playlist=6d114f63-833d-4b78-bbf5-ae3c00026b44

Chinese wind turbine makers are expanding their global footprint at an impressive rate. Leading manufacturers like Goldwind, Envision, Mingyang and Windey are exporting their turbines at a significant discount to Western incumbents, undercutting their rivals and establishing themselves in developing economies and emerging markets. Yet while the volume of their orders has risen, significant barriers to entry remain, including low brand awareness, a limited track record outside of China and political risks that are raising red flags for buyers, lenders and insurers. So just how large is the threat these Chinese manufacturers pose to established Western companies? On today’s show, Tom Rowlands-Rees is joined by Oliver Metcalfe, BloombergNEF’s Head of Wind, to discuss the note “China Wind Turbine Export Update: Momentum Builds”. Complementary BNEF research on the trends driving the transition to a lower-carbon economy can be found at BNEF<GO> on the Bloomberg Terminal or on bnef.com Links to research notes from this episode: China Wind Turbine Export Update: Momentum Builds - https://www.bnef.com/insights/35671/view See omnystudio.com/listener for privacy information.

## Transcript

[0:00] Speaker 1: This is Tom Ownzuie and you're listening to Switched on
[0:02] Speaker 1: the BNF podcast. Chinese wind turbine manufacturers are expanding their
[0:06] Speaker 1: global footprint on a seemingly ever increasing scale, with manufacturers
[0:10] Speaker 1: like goldwind, Envision, ming Yang and Windy leveraging their cost
[0:13] Speaker 1: advantages to undercut US and European rivals. While lower equipment
[0:17] Speaker 1: prices may be a massive carrot for developing economies and
[0:20] Speaker 1: emerging markets, barriers to adoptions still exist with low brand awareness,
[0:23] Speaker 1: a limited overseas track record, and political risk, raising concerns
[0:27] Speaker 1: from buyers, lenders and insurers. As we discuss on today Show,
[0:30] Speaker 1: the Belton Road Initiative and other financial incentives may be
[0:33] Speaker 1: in place to help mitigate some of these potential stumbling blocks.
[0:36] Speaker 1: But just how fast is the Chinese turbine export market
[0:39] Speaker 1: expanding and how large an issue does it pose for
[0:41] Speaker 1: Western manufacturers. On today Show, I'm joined by BNF's head
[0:44] Speaker 1: of Wind, Ollie Metcalf, who shares some other research fund
[0:47] Speaker 1: in his team's recent report China wind Turbine Export Update
[0:50] Speaker 1: Momentum Builds, which BNF clients can find at BNF go
[0:53] Speaker 1: on the Bloomberg Terminal or on BNF dot Com. Now
[0:57] Speaker 1: onto the pod Olie. Thanks for joining today. It feels
[1:09] Speaker 1: like only yesterday that we were doing a podcast together
[1:13] Speaker 1: in this very room, and we were talking about some
[1:15] Speaker 1: of the global pictures in the wind industry. One of
[1:18] Speaker 1: the things we briefly touched on was Chinese turbine makers.
[1:22] Speaker 1: And I always have had this view, all this understanding
[1:25] Speaker 1: of like the world of wind being almost like two
[1:28] Speaker 1: parallel universes. There's China, where there's a big market for
[1:32] Speaker 1: wind serviced by Chinese turbine manufacturers, and then there's the
[1:36] Speaker 1: rest of the world serviced predominantly by Western turbine manufacturers,
[1:40] Speaker 1: and these parallel universes kind of never meet or intersect.
[1:43] Speaker 1: But from what I'm understanding from your team's latest research,
[1:46] Speaker 1: that's not really true anymore. Is that correct?
[1:49] Speaker 2: Well, I don't think it's ever been quite that clear cut,
[1:52] Speaker 2: but we've definitely started to see those two worlds blend
[1:55] Speaker 2: a lot more over the last few years. Part of
[1:58] Speaker 2: that is because what we've seen going on in these
[2:01] Speaker 2: Chinese turbine makers home market. So the price of Chinese
[2:05] Speaker 2: turbines has tumbled fifty seven percent since the first half
[2:08] Speaker 2: of twenty twenty, and that's put intense pressure on the
[2:12] Speaker 2: profit margins they're earning on turbine sales at home. So
[2:15] Speaker 2: there's been this big push for Chinese turbine makers to
[2:19] Speaker 2: start finding export contracts. Usually they can sell turbines for
[2:22] Speaker 2: higher prices or they can at home, and so we're
[2:25] Speaker 2: starting to see more and more orders signed and slowly
[2:28] Speaker 2: more and more commissioned turbines using Chinese turbine technologies on
[2:32] Speaker 2: projects around the world compared with with the last few years.
[2:35] Speaker 2: So we're really seeing this inflection point at the moment
[2:38] Speaker 2: in Chinese turbine sales around the world.
[2:40] Speaker 1: So which companies are we talking about here and which
[2:44] Speaker 1: markets are they selling to and what kind of volumes.
[2:48] Speaker 2: So the largest turbine maker in the world is a
[2:50] Speaker 2: Chinese company called Goldwind, and they're also the company with
[2:54] Speaker 2: the longest history actually exporting their products as well. So
[2:58] Speaker 2: historically they've installed turbines in the US, they've installed many
[3:02] Speaker 2: turbines in markets like Australia and Vietnam, and they're still
[3:06] Speaker 2: one of the biggest players signing orders and kind of
[3:08] Speaker 2: driving this export story from Chinese turbine makers. The company
[3:12] Speaker 2: that's doing best in terms of signing new orders for exports.
[3:16] Speaker 2: At the moment though, is the second largest turbine maker
[3:19] Speaker 2: in China, a company called Envision. In Vision until now
[3:22] Speaker 2: has mostly been focusing on Asian markets and markets in
[3:25] Speaker 2: the Middle East for their sales, but they've starting to
[3:28] Speaker 2: install more turbines. But they've actually signed a fantastic number
[3:32] Speaker 2: of new orders. So of the new international orders secured
[3:36] Speaker 2: by Chinese turbine makers that we've tracked over twenty twenty
[3:39] Speaker 2: three and twenty twenty four, in Vision represents eighty percent
[3:42] Speaker 2: of those, and a really strong market for them is India.
[3:44] Speaker 2: So they installed the local manufacturing facility in India. That
[3:48] Speaker 2: gives you a big advantage in India because you need
[3:51] Speaker 2: to manufacture the nassel, the kind of big box on
[3:54] Speaker 2: top of the turbine in India to have that turbine
[3:57] Speaker 2: approved by the government to be installed in India. So
[4:00] Speaker 2: having that local manufacturing facility has really given Envision the
[4:04] Speaker 2: edge in India. And so from a few years ago
[4:08] Speaker 2: when it was almost completely Western turbine makers like Siemens,
[4:11] Speaker 2: Gamesa like ge that dominated the Indian wind market, if
[4:16] Speaker 2: you look at the order signed last year, it was
[4:18] Speaker 2: completely local Indian turbine manufacturers and Chinese manufacturers and predominantly
[4:23] Speaker 2: in Vision.
[4:24] Speaker 1: You touched on some of the reasons why why this
[4:26] Speaker 1: is happening, and I want us to sort of maybe
[4:28] Speaker 1: explore this a little bit more. Companies like Goldwin and Envision.
[4:31] Speaker 1: I mean you may not even know the answer. I mean,
[4:33] Speaker 1: how long have those companies been doing their thing. It's
[4:36] Speaker 1: like more than a decade.
[4:38] Speaker 2: Yeah, more than a decade. Like I say, these were
[4:40] Speaker 2: the companies that were building some of the first turbines
[4:43] Speaker 2: in the Chinese wind market.
[4:44] Speaker 1: Yeah, because you know, I kind of imagine if I
[4:47] Speaker 1: think of this in just more of sort of a
[4:48] Speaker 1: macro abstract term, if you're like a Chinese wind turbine manufacturer,
[4:53] Speaker 1: say ten to fifteen years ago, then obviously, you know,
[4:56] Speaker 1: even if there's a global demand for wind turbines, you're
[4:59] Speaker 1: not gonna be able to scare up instantly to meet that.
[5:01] Speaker 1: And there's probably a big demand domestically, so you're going
[5:03] Speaker 1: to keep scaling and scaling and selling locally and selling
[5:06] Speaker 1: locally whilst that opportunity is always there, and you know,
[5:09] Speaker 1: scaling up as quickly as as you can. And is
[5:11] Speaker 1: this just simply a case that they've now just reached
[5:14] Speaker 1: that size where they've now outgrown their domestic market, and
[5:18] Speaker 1: everything you're saying around the price difference is, is that
[5:20] Speaker 1: just a reflection of that.
[5:21] Speaker 2: In terms of manufacturing capacity, they've definitely outgrown their local market.
[5:26] Speaker 2: Last time we tracked nassell manufacturing capacity, Chinese neceelle manufacturing
[5:30] Speaker 2: capacity in China was over double the demand in their
[5:35] Speaker 2: domestic market. So there's certainly a lot of spare manufacturing
[5:38] Speaker 2: capacity going to export to other markets. And you're right,
[5:41] Speaker 2: China is by far the biggest wind market globally, and
[5:45] Speaker 2: historically these turbine makers have been and still are to
[5:49] Speaker 2: a certain extent, very much occupied with serving that really
[5:53] Speaker 2: big domestic demand. But like I say, margins are solo
[5:57] Speaker 2: at home, and they've got this spare manufacturing capacity in
[5:59] Speaker 2: their home market, and so there are these kind of
[6:01] Speaker 2: other drivers that are pushing Chinese turbine makers to try
[6:04] Speaker 2: to export. And then, obviously, from the developers perspective, a
[6:07] Speaker 2: lot of these manufacturers selling Chinese machines are offering really
[6:11] Speaker 2: attractive prices at between fifteen to forty percent cheaper. We
[6:16] Speaker 2: found in a developer survey that we ran last year.
[6:19] Speaker 1: One of the things you mentioned there was that you know,
[6:22] Speaker 1: it's almost like the manufacturing capacity is double the needs
[6:25] Speaker 1: of the local market, which suggests to me that you know,
[6:27] Speaker 1: they've been at the point of having outgrown their local
[6:30] Speaker 1: market for a while, because I'm sure it wasn't just
[6:32] Speaker 1: in the last year they doubled their capacity. So you've
[6:34] Speaker 1: talked to why this is happening now, but why was
[6:38] Speaker 1: it not happening sooner?
[6:39] Speaker 2: Well, I think what differs around the wind industry is
[6:42] Speaker 2: compared with other clean tech manufacturing sectors, is it's a
[6:46] Speaker 2: lot more difficult to ship wind components around the world.
[6:49] Speaker 2: So some of the blades that are being installed on
[6:52] Speaker 2: offs your wind turbines are well over one hundred meters
[6:54] Speaker 2: long now, and so it doesn't make sense once exports
[6:58] Speaker 2: reach a certain level ton in new shipping these massive
[7:01] Speaker 2: components all over the world. So despite the fact that
[7:04] Speaker 2: some of these Chinese taboy makers have additional manufacturing capacity
[7:07] Speaker 2: at home, we're beginning to see them also try to
[7:10] Speaker 2: expand their manufacturing capacity in foreign markets as well. I
[7:13] Speaker 2: mentioned Envisions factory in India. Goldwind has actually bought a
[7:18] Speaker 2: manufacturing facility in Brazil and has started manufacturing turbines locally
[7:22] Speaker 2: there as well. And they're really starting to see their
[7:25] Speaker 2: sales increase in Latin American markets as well. So even
[7:29] Speaker 2: though we've got this kind of great manufacturing over capacity
[7:33] Speaker 2: for turbine manufacturers in China, it still doesn't mean that
[7:36] Speaker 2: they're not kind of having to increase their manufacturing capacity elsewhere.
[7:41] Speaker 1: That's so interesting, and I suppose this is a difference
[7:44] Speaker 1: between some other technologies that are more modular, like solar batteries,
[7:49] Speaker 1: even cars or components for cars like batteries, where you
[7:54] Speaker 1: would expect if Chinese companies are dominant, then that means
[7:57] Speaker 1: that most of that manufacturing and the jobs associated it
[8:00] Speaker 1: will be concentrated in China. But because of this fact
[8:03] Speaker 1: that winds so much harder to ship, does this not
[8:07] Speaker 1: necessarily mean a concentration of all the jobs and economic
[8:10] Speaker 1: opportunity coming to China? Is just something where Chinese companies
[8:13] Speaker 1: have technical expertise that they're exporting to the rest of
[8:16] Speaker 1: the world.
[8:16] Speaker 2: Yeah, I think the distribution of jobs is likely to
[8:20] Speaker 2: be a lot more geographically diverse arising from some of
[8:24] Speaker 2: these orders. I think one of the key barriers and
[8:26] Speaker 2: another one of the reasons that we haven't seen more
[8:28] Speaker 2: Chinese turbine sold abroad recently has been around developers' concerns
[8:33] Speaker 2: around real commitment to the market. Often the turbine sale
[8:36] Speaker 2: is accompanied by a really long term operations and maintenance
[8:39] Speaker 2: agreement that can be ten, twenty, sometimes even more years,
[8:43] Speaker 2: and so developers are worried not just about signing that
[8:46] Speaker 2: contract for the cheapest price, but also feeling comfortable that
[8:51] Speaker 2: the company they're dealing with will also be in the
[8:53] Speaker 2: market in ten years and still delivering those O and
[8:55] Speaker 2: M services all that time down the road. I think
[8:58] Speaker 2: one of the key things that Chinese turbo makers have
[8:59] Speaker 2: been doing to kind of prove that market commitment have
[9:02] Speaker 2: been to set up local manufacturing facilities in some cases,
[9:06] Speaker 2: but the first step for many of these companies is
[9:08] Speaker 2: to set up local O and M teams. And you
[9:10] Speaker 2: speak to several of these Chinese manufacturers and they're trying
[9:14] Speaker 2: to hire locally and trying to train people locally, so
[9:17] Speaker 2: minimize a number of Chinese nationals that are sitting in
[9:20] Speaker 2: those O and M teams around the world and trying
[9:24] Speaker 2: to deliver that local market commitment, but also the local
[9:28] Speaker 2: economic benefit that the wind industry can bring in these
[9:30] Speaker 2: foreign markets.
[9:31] Speaker 1: And it really sounds, you know, When I'm hearing all this,
[9:35] Speaker 1: I'm like, what's not to love? You know, it sounds
[9:38] Speaker 1: like a good news story. Last time you were on
[9:40] Speaker 1: the podcast, I remember giving you a bit of a
[9:42] Speaker 1: hard time. Basically I said that wind wasn't pulling its
[9:45] Speaker 1: weight in the global energy transition, was falling short of
[9:48] Speaker 1: its potential all sorts of barriers. So this development is
[9:52] Speaker 1: it good for the industry? Do you think it could
[9:53] Speaker 1: help change that sort of picture of maybe wind not
[9:56] Speaker 1: quite fulfilling its potential.
[9:58] Speaker 2: In many cases, it's accelerating the energy transition, particularly in
[10:02] Speaker 2: developing markets. So we're seeing projects spring up in markets
[10:07] Speaker 2: sort of never built a wind farm before starting to
[10:10] Speaker 2: build these wind farms with really cheap capital costs because
[10:14] Speaker 2: they're using Chinese technology. Often it's also a big state
[10:17] Speaker 2: owned Chinese developer that will be building the projects in
[10:20] Speaker 2: these markets, and they bring the suppliers that they're used
[10:23] Speaker 2: to working within their home market to these foreign markets.
[10:26] Speaker 2: So we saw a couple of really big projects, for
[10:29] Speaker 2: example in Uzbekistan in twenty twenty four come online and
[10:32] Speaker 2: those will be using Chinese machines. Countries like Georgia, some
[10:38] Speaker 2: countries in Africa are really switching towards Chinese machines or
[10:41] Speaker 2: in some cases building their first projects at cheaper prices.
[10:45] Speaker 2: So in many markets around the world, particularly those that
[10:48] Speaker 2: are less interested in the competitive dynamics and geopolitics surrounding
[10:53] Speaker 2: whether you source your equipment from a US or European
[10:56] Speaker 2: country versus China, they're really benefiting from the cheaper prices.
[11:01] Speaker 2: And like I say, that's what's kind of delivered this
[11:04] Speaker 2: inflection point in Chinese turbine installations and also orders we're
[11:09] Speaker 2: orders we're seeing. So last year we saw a record
[11:12] Speaker 2: commissioning of Chinese turbines around the world at around two
[11:16] Speaker 2: point two gigawatts, but we also tracked around five point
[11:19] Speaker 2: three gigawatts of Chinese turbine orders. So you can see
[11:23] Speaker 2: over the next couple of years the number of machines
[11:26] Speaker 2: that are going to come online is is going to
[11:28] Speaker 2: start ramping up as well.
[11:30] Speaker 1: So there is a lot of potential upsides, or maybe
[11:33] Speaker 1: not even potential upsides that we're already seeing, but maybe
[11:36] Speaker 1: we talk about, you know, downsides. And obviously you know
[11:39] Speaker 1: I painted this picture at the start of these parallel universe,
[11:42] Speaker 1: which you know, you Julie told me was wrong. So
[11:44] Speaker 1: thanks for that you know, but if we just hold
[11:49] Speaker 1: on to that, in this parallel universe that was the
[11:51] Speaker 1: sort of the Western market with Western manufacturers, you had
[11:53] Speaker 1: companies like Vesta's, Jeevanova, Zieman's dominant. So what does this
[11:57] Speaker 1: mean for them.
[11:58] Speaker 2: Well, in a couple of cases is it means that
[12:00] Speaker 2: they're significantly changing the footprint, the kind of their footprints,
[12:05] Speaker 2: the markets they're looking at to sell turbines too. So
[12:08] Speaker 2: we've seen several of these Western companies leave markets. One
[12:12] Speaker 2: market is Brazil, where g and Semans can may send. Also,
[12:16] Speaker 2: Nordics have significantly rained back their plans to sell turbines
[12:19] Speaker 2: in Brazil or left the market completely. And I think
[12:22] Speaker 2: in many of these markets that again are happy to
[12:25] Speaker 2: be installing Chinese machines and working with Chinese companies. Then
[12:30] Speaker 2: Western manufacturers in many cases just can't compete two of
[12:34] Speaker 2: the biggest markets around the world for wind energy, the
[12:38] Speaker 2: US and Europe. I says one market is actually many
[12:41] Speaker 2: different markets because the wind industry and the drivers are
[12:44] Speaker 2: very different in lots of different European countries. But two
[12:47] Speaker 2: of the biggest markets in the world aren't really buying
[12:50] Speaker 2: Chinese turbines, and due to tariffs or political barriers, we're
[12:55] Speaker 2: not seeing sales, and so those are markets where some
[12:58] Speaker 2: of those Western companies like Vested, like Jievanova are able
[13:01] Speaker 2: to sign higher price contracts and deliver some of the
[13:06] Speaker 2: volume that they're losing in, especially some emerging markets that
[13:09] Speaker 2: they were dominating in the past.
[13:12] Speaker 1: I mean on this point about how Western manufacturers can
[13:15] Speaker 1: cope with this. On our podcast on Latin, there was
[13:19] Speaker 1: this sense of a changing of the guard moment when
[13:22] Speaker 1: BYD the Chinese auto manufacturer, took over a Ford plant
[13:25] Speaker 1: in Brazil and you just mentioned that, you know, Goldwind
[13:29] Speaker 1: have taken over a Brazilian wind turbine factory from a
[13:32] Speaker 1: General Electric. Now in the auto industry, there's this sort
[13:35] Speaker 1: of sense of pushback from a lot of Western governments,
[13:39] Speaker 1: particularly the US, or at least I'm more familiar with
[13:41] Speaker 1: what's happening in the US there because this is where
[13:43] Speaker 1: I'm based, you know, trying to fight for the domestic
[13:46] Speaker 1: auto industry one way or the other, and you know,
[13:48] Speaker 1: different administrations have different strategies. But do you think we
[13:52] Speaker 1: might see something similar for Western turbine makers as some
[13:56] Speaker 1: sort of support or assistance to help them compete against
[14:00] Speaker 1: Chinese manufacturers so that it doesn't become a sort of
[14:03] Speaker 1: global Chinese monopoly.
[14:05] Speaker 2: Well, there's already been some moves to protect the industry
[14:10] Speaker 2: in Europe in particular. So some of the biggest winter
[14:13] Speaker 2: ber makers in the world are European. So Vestis is
[14:16] Speaker 2: a Danish company, Siemens Energy is a German company. So
[14:21] Speaker 2: I think Europe is looking at this industry where it
[14:25] Speaker 2: has been a clear leader in the past, and it
[14:28] Speaker 2: doesn't want that industry to go the same way as,
[14:30] Speaker 2: for example, solar manufacturing, where Europe used to have a
[14:33] Speaker 2: significant footprint and doesn't so much today. So a couple
[14:37] Speaker 2: of years ago, the EU announced a Wind Power Action
[14:40] Speaker 2: Plan to provide support for its wind industry, so laying
[14:43] Speaker 2: out a number of actions to ease the challenges facing
[14:47] Speaker 2: the sector. And one of the things that the package
[14:48] Speaker 2: suggested was that the EU could use trade defense instruments
[14:53] Speaker 2: if it found that foreign companies had been unfairly subsidized.
[14:56] Speaker 2: That kind of raised the potential of tariffs. And there's
[15:01] Speaker 2: a peaceful legislation called the Foreign Subsidies Regulation that has
[15:05] Speaker 2: limited the success of Chinese turbine makers in public tenders,
[15:09] Speaker 2: basically because the EU has started investigations into Chinese turbine
[15:12] Speaker 2: providers to certain projects to determine the extent to which
[15:16] Speaker 2: they've benefited from non EU government subsidies. So in some
[15:19] Speaker 2: of these cases, Chinese turbine makers are having to open
[15:21] Speaker 2: their books to the EU to basically establish how much
[15:26] Speaker 2: subsidies they've received from the Chinese governments. And in some
[15:30] Speaker 2: other public tenders, there was a tender for a railway
[15:33] Speaker 2: in Eastern Europe that was won by a Chinese company,
[15:35] Speaker 2: and when asked to provide all that data and all
[15:37] Speaker 2: that information to the EU, the company just decided it
[15:40] Speaker 2: it wouldn't continue with the tender and it dropped the contract.
[15:43] Speaker 2: It's just very unclear at the moment in the EU
[15:46] Speaker 2: which projects are going to be investigated, which companies are
[15:49] Speaker 2: going to be investigated, And so that means if you're
[15:51] Speaker 2: a Chinese turbine maker, it makes it very difficult to
[15:54] Speaker 2: speak with your customers and let them know exactly what
[15:57] Speaker 2: could or what could not happen if they're considering some
[16:00] Speaker 2: one of these deals. So I was in Beijing at
[16:01] Speaker 2: the end of last year, and I was I was
[16:02] Speaker 2: speaking to some Chinese turbine makers and they were saying,
[16:05] Speaker 2: it's that uncertainty in the market that's really kind of
[16:08] Speaker 2: killing deals in the EU at the moment. If there
[16:10] Speaker 2: was just a hard tariff, they said that they prefer
[16:12] Speaker 2: a hard tariff because then they can look at their costs,
[16:15] Speaker 2: they can look at the price that they're going to
[16:16] Speaker 2: receive for these turbines and work out with the tariff
[16:18] Speaker 2: is it's still going to be worth signing that contract.
[16:21] Speaker 2: But at the moment, they're customers are nervous to sign
[16:23] Speaker 2: these deals because they're kind of foreign subsitas. Regulation is
[16:26] Speaker 2: a little bit unclear about how it's going to be applied,
[16:29] Speaker 2: and they're unclear on what the results of some of
[16:31] Speaker 2: these investigations could be. And so that kind of political
[16:34] Speaker 2: risk and trade barriers is one of the key things
[16:36] Speaker 2: that are stopping Chinese turbine makers making more sales in Europe,
[16:39] Speaker 2: and that's benefiting those Western players at the moment.
[16:42] Speaker 1: One of the things that it makes me want to so,
[16:44] Speaker 1: I mean, we see in Europe there's a huge amount
[16:46] Speaker 1: of uncertainty if you're a Chinese turbine manufacturer. In the
[16:49] Speaker 1: US right now, there's just uncertainty around wind full stop.
[16:53] Speaker 1: And even if the market does kind of make it
[16:56] Speaker 1: through I would imagine there's still going to be some
[16:58] Speaker 1: kind of similar situation. So that's the EU and the US.
[17:02] Speaker 1: I don't imagine anyone else in the world. I mean India,
[17:04] Speaker 1: another major market, seems to have found an equilibrium with
[17:07] Speaker 1: local manufacturers and Chinese manufacturers. So it's really that the
[17:11] Speaker 1: EU and the US might be shutting off. I mean,
[17:13] Speaker 1: does that really matter right now if you're a Chinese manufacturer,
[17:16] Speaker 1: Given like there's the rest of the world is open
[17:20] Speaker 1: for business and receptive to these turbines, is it really
[17:23] Speaker 1: going to harm them that much? Is it really the
[17:25] Speaker 1: case that there's maybe a sort of slightly isolationist thing
[17:28] Speaker 1: where Europe and maybe the US will kind of have
[17:31] Speaker 1: their own little industry at maybe a higher cost to
[17:34] Speaker 1: support local companies, but the Chinese manufacturers will still have
[17:38] Speaker 1: plenty of pie left over for them.
[17:40] Speaker 2: Yeah. Well, mayby be looking at those two separate worlds again,
[17:43] Speaker 2: But the world supplied by the Chinese manufacturers has drastically increased,
[17:48] Speaker 2: because if you look at the numbers, then that's certainly
[17:50] Speaker 2: playing out. So Chinese Taiwian manufacturers orders have been shooting up.
[17:55] Speaker 2: Like I said, we tracked five point three gigwats of
[17:58] Speaker 2: firm orders that were signed by Chinese turbine makers last
[18:01] Speaker 2: year when we actually spoke with these players, they actually
[18:03] Speaker 2: claimed an extra twenty one point two gigwats of orders.
[18:06] Speaker 2: We're still in the process of working out whether those
[18:08] Speaker 2: are firm deals or whether those are kind of conditional
[18:10] Speaker 2: agreements or preferred supplier agreements, so they might not be
[18:14] Speaker 2: locked in, but it goes to show the kind of
[18:16] Speaker 2: volume that these Chinese turbine makers are beginning to realize
[18:20] Speaker 2: in the conversations and the deals they're signing around the world.
[18:22] Speaker 2: So for the moment, there's plenty of growth out there
[18:26] Speaker 2: for these Chinese turbine makers, despite the fact that they
[18:28] Speaker 2: still represent a kind of sliver of the EU US market.
[18:33] Speaker 1: I mean coming at it from a slightly different angle,
[18:35] Speaker 1: because I can see, for a Chinese turbine manufacturer, yeah,
[18:38] Speaker 1: there's the world as their oyster right now. But the
[18:40] Speaker 1: US and the EU may only be a fraction of
[18:43] Speaker 1: the overall market for wind turbines, but they are more
[18:46] Speaker 1: than just a fraction of global emissions. And so there's
[18:49] Speaker 1: this other question of you know, what is best for
[18:52] Speaker 1: bringing emissions down, and the CEO of French turbine manufacturer Neo,
[18:57] Speaker 1: and in an investigle recently, they mentioned that they're open
[19:00] Speaker 1: to Chinese turbine manufacturers and they spoke a little bit
[19:04] Speaker 1: to you know, maybe this is needed to break what
[19:07] Speaker 1: they termed as an oligopoly of the Western manufacturers, and
[19:12] Speaker 1: so I suppose my question is, is this, you know,
[19:15] Speaker 1: a necessary development to really spur the wind market in
[19:20] Speaker 1: those markets that may not be as open to US
[19:22] Speaker 1: and EU manufacturers, but at least the threat of these
[19:25] Speaker 1: Chinese turbine manufacturers might force prices down for wind turbines.
[19:29] Speaker 1: Is that something that we could see happening.
[19:31] Speaker 2: We've certainly seen many developers, not just the one you mentioned,
[19:34] Speaker 2: but developers around the world say that they're open to
[19:37] Speaker 2: assigning agreements and securing turbines from Chinese companies, some really
[19:43] Speaker 2: big players of the European wind power industry, particularly offshore.
[19:47] Speaker 2: If you look at the offshore wind industry outside of China,
[19:49] Speaker 2: it's really only served by three major players. So that's Vestis,
[19:53] Speaker 2: that's Semen's Energy, and that's Gee even over it's a
[19:56] Speaker 2: very concentrated market. Gee even said amidst some issues around
[20:00] Speaker 2: profitability of some of the contracts they've signed in the
[20:02] Speaker 2: past that they're going to pull back from the offshore
[20:05] Speaker 2: wind market and hold off signing new orders at the moment.
[20:07] Speaker 2: So there aren't many options for developers out there today,
[20:11] Speaker 2: particularly in offshore wind, and so the potential entry of
[20:15] Speaker 2: new players into those markets, particularly new players that are
[20:19] Speaker 2: offering really attractive prices, you can see why developers in
[20:22] Speaker 2: Europe are interested as well. So an example is for RWE,
[20:26] Speaker 2: a big German utility, sent a delegation to China to
[20:30] Speaker 2: meet with a load of load of turbine makers understand
[20:33] Speaker 2: their technology, to try and kind of better understand the
[20:37] Speaker 2: various technological characteristics the risks perhaps that come with buying
[20:41] Speaker 2: these machines. But yeah, there are many European developers that
[20:45] Speaker 2: are kind of flirting with Chinese technology at the moment,
[20:48] Speaker 2: given that they're purchasing from a market which is very
[20:50] Speaker 2: concentrated around two or three players at the moment.
[20:53] Speaker 1: So in terms of offshore wind, is it the same manufacturers,
[20:56] Speaker 1: say Goldwyn and Vision who are competing from China.
[21:00] Speaker 2: Actually there's a company called Minyang which is really targeting
[21:03] Speaker 2: the offshore wind sector. So while Goldwind and Envision have
[21:07] Speaker 2: sold a few turbines that have been installed offshore, particularly
[21:11] Speaker 2: in Vietnam where they've been building near shore projects, so
[21:14] Speaker 2: projects typically using onshore turbines but built very close to
[21:17] Speaker 2: the shore, but offshore. Min Yang is really targeting some
[21:21] Speaker 2: of the big European projects that are being installed today
[21:26] Speaker 2: where kind of the largest scale offshore wind projects in
[21:28] Speaker 2: the world are currently being built, and they're doing that
[21:31] Speaker 2: by really ramping up their plans for technology scale. So
[21:35] Speaker 2: Minyang currently offers a turbine that's around eighteen megawats, and
[21:39] Speaker 2: that's larger than any of the turbines that is commercially
[21:42] Speaker 2: available at the moment from Western turbine makers, and that's
[21:45] Speaker 2: starting to turn some heads in the European offshore wind industry.
[21:49] Speaker 2: So a German developer called Lukskara last year signed a
[21:54] Speaker 2: two hundred and seventy megawat turbine supply contract with Minyang
[21:58] Speaker 2: for their Waacant project in Germany, and that's set to
[22:01] Speaker 2: use Mnyang's eighteen megawatt turbines. So we're beginning to see
[22:06] Speaker 2: the first kind of iteration of maybe the big incumbent
[22:10] Speaker 2: two or three offshore wind turbine manufacturers in Europe. Start
[22:14] Speaker 2: to see some Chinese competition. I think a lot of
[22:16] Speaker 2: developers are watching to see how that deal progresses, whether
[22:20] Speaker 2: the EU raises objections, how those turbines operate offshore, because
[22:24] Speaker 2: there's very little operational track record for Chinese offshore wind
[22:29] Speaker 2: turbines outside of their home market, and so these pathfinder
[22:32] Speaker 2: deals are going to be crucial to see the kind
[22:35] Speaker 2: of uptake that they'll get on a wider basis across
[22:38] Speaker 2: the offshore wind industry, particularly in Europe where so much
[22:40] Speaker 2: build has happened in the past.
[22:42] Speaker 1: Generally speaking, obviously there's a lot of momentum and clear
[22:46] Speaker 1: advantages currently that favor Chinese turbine manufacturers. Generally speaking, what
[22:51] Speaker 1: barriers do they face?
[22:53] Speaker 2: Well, yeah, given the kind of cheaper pricing that some
[22:56] Speaker 2: of these manufacturers are offering. We were asking developers in
[22:59] Speaker 2: our a what stopped the faster uptake of these machines,
[23:02] Speaker 2: and there are a few different things that came up.
[23:05] Speaker 2: So one of them was just lower brand awareness. So
[23:08] Speaker 2: I would say most developers around the world know who
[23:10] Speaker 2: Goldwind is. They also probably have heard of Envisioned before.
[23:13] Speaker 2: But there are some other Chinese turbine makers that are
[23:16] Speaker 2: trying to sell turbines around the world that are less
[23:19] Speaker 2: well known. They may be very well known and have
[23:21] Speaker 2: huge order books in China, but companies like Windy, like
[23:24] Speaker 2: Sanny are just starting to try and accelerate their exports
[23:28] Speaker 2: of their turbines. But because many international developers prioritize proven
[23:33] Speaker 2: reliability and an operational record for the machines that they procure,
[23:38] Speaker 2: it takes a bit of a leap of faith in
[23:39] Speaker 2: order to buy some of these kind of machines from
[23:42] Speaker 2: lesser known brands. So that kind of lower brand awareness
[23:45] Speaker 2: provides a barrier in some markets. I mentioned market commitments,
[23:49] Speaker 2: So most wind filem owners plan to operate their projects
[23:51] Speaker 2: for twenty five to thirty years, so you really want
[23:54] Speaker 2: to know that that company is still going to be
[23:56] Speaker 2: around to potentially service your machines twenty years down the road,
[23:59] Speaker 2: and so kind of really demonstrating that they're in the
[24:02] Speaker 2: market to stay is something crucial for some of these
[24:04] Speaker 2: Chinese turbine makers in order to make more sales. Also,
[24:08] Speaker 2: we've seen some financing and insurance barriers, So some financiers,
[24:12] Speaker 2: some insurers are less familiar with these Chinese turbines, and
[24:16] Speaker 2: so they've been a little bit more reluctant to lend
[24:18] Speaker 2: to these projects, to ensure these projects using lesser known
[24:23] Speaker 2: machines that historically in some cases haven't been certified by
[24:27] Speaker 2: a big international certification agency. We actually at Bloomberg NIF's
[24:31] Speaker 2: London summit, we had a representative from abn Amro that
[24:35] Speaker 2: said that she still would be hesitant to finance a
[24:38] Speaker 2: project using Chinese technology. So there are still some barriers
[24:42] Speaker 2: there and kind of linking back to that kind of
[24:45] Speaker 2: lower brand awareness, that kind of market commitment question. But
[24:48] Speaker 2: some of the most risk averse players across the wind
[24:50] Speaker 2: market are financiers and insurers, and so in some markets
[24:55] Speaker 2: it's going to take a little bit of time for
[24:57] Speaker 2: those players to become comfortable with these new competitors in market.
[25:00] Speaker 2: And then the final thing I think that we discussed
[25:03] Speaker 2: previously was around political risk and so yeah, some trade tensions.
[25:07] Speaker 2: We've seen some protectionist policies around the world, but also
[25:10] Speaker 2: markets around the world want to benefit from a growing
[25:12] Speaker 2: wind industry as well, so we see some kind of
[25:14] Speaker 2: strong incentives for local manufacturing. In some markets, like South Korea,
[25:19] Speaker 2: for example, awards subsidies partly on the basis of local
[25:23] Speaker 2: economic impact and market commitment, and so that can sometimes
[25:26] Speaker 2: provide a barrier if Chinese turbine makers don't have existing
[25:29] Speaker 2: manufacturing capacity in these markets.
[25:31] Speaker 1: I suppose all of this that we're talking about is
[25:34] Speaker 1: built around the idea that Chinese manufacturers are making wind
[25:38] Speaker 1: turbines for a lot less money, and therefore they're cheaper,
[25:41] Speaker 1: and therefore developers prefer them because who doesn't like getting
[25:45] Speaker 1: something cheaper. But you also mentioned this kind of overcapacity
[25:49] Speaker 1: relative to the local market that had existed, and therefore
[25:53] Speaker 1: they're expanding. Could it be that this is a sort
[25:55] Speaker 1: of a little bit of a flash in the pan
[25:57] Speaker 1: moment that once these Chinese turbine manufacturers really sort of
[26:02] Speaker 1: max out on these new markets and they no longer
[26:05] Speaker 1: have this over capacity, they're no longer going to be
[26:07] Speaker 1: selling turbines so cheaply, and that the price difference between
[26:11] Speaker 1: the Western incumbents and the Chinese turbine manufacturers will just
[26:15] Speaker 1: sort of become a little bit more similar. We're talking
[26:17] Speaker 1: about everything like this is a new phase maybe for
[26:19] Speaker 1: the industry, But could this just be a temporary thing.
[26:23] Speaker 2: There's certainly a bit of evidence that some of these
[26:25] Speaker 2: Chinese turwine makers are offering really cheap prices in an
[26:28] Speaker 2: effort to enter these markets, so trying to undercut the
[26:31] Speaker 2: competition that's there already. When we ran that developer survey
[26:35] Speaker 2: asking why these companies were buying these machines and what
[26:38] Speaker 2: these price differences were, we saw quite a big regional difference.
[26:42] Speaker 2: I said, between kind of fifteen and forty percent cheaper.
[26:45] Speaker 2: In some markets, particularly close to China, is where you
[26:47] Speaker 2: see some of the deepest discounts compared with the Western machines,
[26:50] Speaker 2: because they can use that local manufacturing capacity to serve
[26:54] Speaker 2: those orders, serve those contracts in some markets, and then
[26:58] Speaker 2: particularly in newer market we're seeing these really steep discounts
[27:02] Speaker 2: in order to try and enter the space. I think
[27:04] Speaker 2: when we talk about the ability of Chinese turbine makers
[27:07] Speaker 2: to sell contracts in the EU, and I mentioned how
[27:10] Speaker 2: it makes sense to have local manufacturing capacity when you
[27:13] Speaker 2: reach a certain scale just purely because of the size
[27:16] Speaker 2: of components. So I think if a Chinese turbine maker
[27:19] Speaker 2: was to try and deliver more contracts in the EU
[27:21] Speaker 2: and there are fewer barriers to allow it to do so,
[27:24] Speaker 2: I think with a local O and M team, with
[27:28] Speaker 2: European nationals, with local manufacturing facilities in Europe, we may
[27:32] Speaker 2: see the kind of price differential erodes slightly compared with
[27:36] Speaker 2: a super cheap Chinese turbine that's manufactured in those facilities
[27:40] Speaker 2: in China. So it doesn't necessarily mean that a Chinese
[27:43] Speaker 2: turbine maker would be able to deliver that same discount
[27:45] Speaker 2: if it was manufacturing the machine in Europe. And that's
[27:48] Speaker 2: kind of another silver lining for Western players, kind of
[27:51] Speaker 2: European wind turbine manufacturers, when they're looking at this potential
[27:55] Speaker 2: competition coming from Chinese manufacturers.
[27:58] Speaker 1: Right In other words, if they're not operating at scale
[28:02] Speaker 1: in Europe, Chinese manufacturers can offer these cheap turbines, you know,
[28:05] Speaker 1: almost as like lost leaders against the market. But if
[28:09] Speaker 1: if you're vestas your jeevanova Zeman's, it seems like this
[28:14] Speaker 1: might be a challenging moment, might be a sort of
[28:16] Speaker 1: scary moment. But what you're saying is they can if
[28:18] Speaker 1: they can ride it out and get to the other side,
[28:21] Speaker 1: then then it'll probably be fine.
[28:23] Speaker 2: Yeah. I wouldn't want to make big sweeping predictions in
[28:27] Speaker 2: the market, And like I say, we've seen market some
[28:29] Speaker 2: markets completely swing towards Chinese manufacturers. I think it would
[28:34] Speaker 2: be more difficult for Chinese turbine makers to come in
[28:38] Speaker 2: and completely dominate the EU market or the US market.
[28:41] Speaker 2: It's certainly a very strong form of competition that represents
[28:45] Speaker 2: a risk to these US and EU companies, but I
[28:48] Speaker 2: think it'll be difficult, like I say, to deliver those
[28:51] Speaker 2: same price discounts in the long term within those markets
[28:54] Speaker 2: for their Chinese competitors.
[28:56] Speaker 1: Sounds to me like this is a challenging moment for
[28:59] Speaker 1: some players, but ultimately it seems like an inevitable and
[29:02] Speaker 1: exciting development. The market is becoming more competitive, more global,
[29:06] Speaker 1: and that has to overall be an exciting moment for
[29:10] Speaker 1: this industry, which, like I mentioned, you could say has
[29:13] Speaker 1: underperformed its potential to date definitely.
[29:16] Speaker 2: I mean, when you're seeing new markets opening up for
[29:18] Speaker 2: wind because of these cheaper prices, new markets across Central Asia,
[29:22] Speaker 2: across Eastern Europe, in Africa, accelerating the energy transition, especially
[29:27] Speaker 2: in my line of work by building wind farms, is
[29:30] Speaker 2: a really positive thing. And so yes, there's definitely risks
[29:33] Speaker 2: to some of the incumbent players in this sector here,
[29:35] Speaker 2: but in many markets this is representing new avenues of
[29:38] Speaker 2: growth and real progression in those countries energy transition strategies.
[29:43] Speaker 1: Well, it's really good to finish on a positive note,
[29:46] Speaker 1: so let's call it there. Ollie, thank you very much
[29:49] Speaker 1: for joining today.
[29:49] Speaker 2: Thanks for having me.
[29:50] Speaker 1: On Today's This episode of Switched On was produced by
[30:02] Speaker 1: Cam Gray with production assistance from Kamala Shelling. Bloomberg NIF
[30:06] Speaker 1: is a service provided by Bloomberg Finance LP and its affiliates.
[30:09] Speaker 1: This recording does not constitute, nor should it be construed,
[30:12] Speaker 1: as investment advice, investment recommendations, or a recommendation as to
[30:16] Speaker 1: an investment or other strategy. Bloomberg ANIF should not be
[30:19] Speaker 1: considered as information sufficient upon which to base an investment decision.
[30:23] Speaker 1: Neither Bloomberg Finance LP nor any of its affiliates makes
[30:26] Speaker 1: any representation or warranty as to the accuracy or completeness
[30:29] Speaker 1: of the information contained in this recording, and any liability
[30:32] Speaker 1: as a result of this recording is expressly disclaimed.

Shows are listed from Apple Podcasts' charts and directory, and Podcast Index where it is used. Every show and episode belongs to its publisher and plays from the publisher's own feed; this site hosts none of them.