EWEA chief warns of peril of protectionism in offshore wind

Local-content rules and other forms of protectionism — either implied or explicit — are creeping into the European offshore wind sector, posing a new threat to an industry that desperately needs to reduce its costs.

Christian Kjaer says local-content rules can hurt those they are meant to protect

Karl-Erik Stromsta, Amsterdam

Although a common bugbear for many global industries, especially energy, outright protectionism has been relatively rare in offshore wind — partly as a result of the sector having mostly grown up in flush economic times, and partly because EU laws make such measures difficult to implement.

But the horrendous economic conditions and political acrimony roiling the EU are darkening the outlook for free-traders, as governments look to ensure offshore wind jobs are created — and remain — at home.

The situation is complicated further by offshore wind’s reliance on public support, which still comes primarily at a national level.

“Local-content requirements are on the agenda in many markets today,” warns Christian Kjaer, chief executive of the European Wind Energy Association (EWEA).

“It’s clear that it’s been good to have competition on winning port facilities in the UK and Germany,” Kjaer tells Recharge. “But in terms of mandating that production happens locally in order to have a hand in a wind farm — that’s not helping anyone, even the countries that are putting these measures together.

“Unfortunately, that’s what happens in an economy like this.”

To date, France has leaned closest to outright local-content requirements in its fledgling offshore wind programme, although Germany is also understood to be pressuring developers to use local subcontractors.

In France’s first 3GW offshore wind tender, launched in July, the government put the potential “industrial and social” benefits offered by a proposed project on the same footing as the anticipated cost of electricity. A third criterion, “respect for the sea and its existing uses”, was given only half the weight of the other two criteria.

Meanwhile, the UK, which has no home-grown turbine giant and has seen much of its manufacturing sector hollowed out in recent decades, has come under fire from some business groups for not doing more to ensure the primary benefits of its Round 3 tender and build-out programme flow inward.

Offshore wind is unusual in having seen so little protectionism. Trade barriers are a common feature in other markets and for other technologies.

In September, German turbine maker REpower said it was retreating from the Chinese wind market, citing “increasing trade protectionism” there. SolarWorld recently initiated an anti-dumping crusade in the US against Chinese PV manufacturers, and China has fired back by launching its own investigation into US government support for the American renewables sector.

Often, such measures are counterproductive — and harmful even to those companies they are intended to protect, says Kjaer.

“When it comes to manufacturing requirements, maybe one third of the value-addition for onshore wind is in the turbine manufacture, while two thirds comes from sub-suppliers,” he says. “Still, governments like to see the name of a national manufacturer on top of the turbines.”

Karl-Erik Stromsta, Amsterdam