European wind leadership at risk

Europe has been the technology and market leader in the wind industry for more than 30 years.

Enlightened leadership in Denmark, Germany, Spain and at European level, bolstered by strong public support for action on climate change and local economic development, has ensured that the continent with arguably the fewest wind resources has led the world.

Strong local markets supported technology development, setting the standard for the rest of the globe. But given the political dithering at national and EU level over climate, energy, renewables and subsidies, one has to ask: “For how much longer?”

This year, Asia will pass Europe as the leader in cumulative wind installations. China will continue to be the largest global market, as it has been since 2009; and Asia will be the biggest regional market, as it has been since 2009.

Perhaps this is just the inevitable evolution of the market. After all, Asia is home to nearly two thirds of the world’s population, and according to the new purchasing power parity statistics generated by the World Bank, China will become the world’s largest economy this year using this measure, although it will only pass the US in absolute terms in about 2017.

But what about Europe’s undisputed leadership position in technology? Can that be maintained in the face of shrinking or stagnating markets?

Only two years ago, we were celebrating the expansion and diversity of the European market, but with political vacillation, weak direction from the European Commission and retroactive “policy adjustment”, we have seen a worrying trend in which the majority of annual installations are concentrated in a few markets. Although Germany has played a large role in creating European and global leadership, we don’t want to return to the situation where the European sector’s fortunes were dependent on a single country.

With the explosive rise of the Chinese industry, there were fears in the West that cheap Chinese turbines would take over the global market. That has not come to pass, for a variety of reasons. Apart from everything else, the strong home market advantage enjoyed by European manufacturers has largely frustrated Chinese efforts to break into the European market; nor, for that matter, have the main US, Japanese or Indian manufacturers made much headway in Europe.

But over the past decade, with a couple of exceptions, most European turbine manufacturers have made the majority of their annual sales outside the EU, either because of the small size of their domestic market (Denmark) or its collapse (Spain). Mostly, they’ve done pretty well, establishing themselves as major players in North America, Asia, Latin America and now in the new markets in Africa.

But can technology leadership survive without a strong home market? What happens if the US ever gets its act together sufficiently to build a consistent market? Asia has an increasingly strong set of players not at all shy of using their home advantage. We see the first local players emerging in Latin America, and stirrings in Africa. How long before they start to crowd out the European players in these critical emerging markets? And what consequence will that have for investment in technology innovation, in terms of the cash flow of the companies in question and for European government and institutional support for a sector losing ground to international competition?

The arguments in favour of strong support for a European wind industry are too many to enumerate. The backing given by governments and institutions to the development of the industry has been paid back several times over in terms of emission reductions, energy security, economic growth and jobs, creating a global leader, onshore and offshore. However, this leadership is at risk — not in the short term, but I believe that unless something changes in Europe we will see the first signs of this by the end of the decade.

We need to add “technology leadership” to the long list of reasons why the dithering in Brussels and national capitals is unacceptable. Leadership in turbine development and manufacturing, to be sure, but also for the technology and market innovations that will support the transformation of our energy system to one dominated by electricity, and an electricity sector dominated by wind, solar and other renewables. Today, Europe is leading in those areas as well, but not for long without a clear recommitment to a renewable-energy future.

Steve Sawyer is secretary-general of the Global Wind Energy Council

This piece was published as part of the Thought Leaders series. Recharge’s Thought Leaders Club brings together leading thinkers and participants from the renewable-energy sector to examine the key challenges facing our industry