Brussels readies ‘trade instruments’ to protect EU’s struggling wind industry

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The European Commission is considering using its “trade instruments” as the EU’s wind industry continues to struggle with fierce competition from China, high raw material prices, rising interest rates, and slow permit-granting processes.

The first support measures at the EU level came in the form of a wind power package presented by the Commission in late October.

Since then, the bloc’s largest manufacturer, Siemens Energy, had to be bailed out of a self-made crisis to the tune of €7.5 billion.

Today, Brussels seems to think that more needs to be done, even though the business case for the wind sector remains “robust”, according to Ditte Juul Jørgensen, a top EU official who runs the European Commission’s energy department.

“We need to make sure that we do everything we can at the European level, at national level, at local levels … to make sure that what has been a success remains a success,” Jørgensen said at a recent Euractiv event.

Morten Petersen, a Danish lawmaker sitting with the European Parliament’s centrist Renew Europe political group, agrees. “My worry is that we don’t see any final investment decisions out there. Clearly, we’re not in a good place,” he said at the event.

Pierre Tardieu, chief policy officer at the lobby group WindEurope, explained: “We’ve got a European wind supply chain that is constrained in its ability to invest because of a perfect storm” of things like higher interest rates and surging material costs.

In the face of this, Brussels is looking at new measures like boosting grid investments so would-be developers can sell the power they produce.

“Access to grids is a key aspect,” Jørgensen explained, saying a plan will come out in December to synchronise European grid development.

‘Trade instruments’ under consideration

But the Commission, which has exclusive competence on trade matters in the EU, still has an ace up its sleeve: anti-dumping tariffs to shield European companies from competition.

“Part of the challenge in the sector is global competition and what is not currently a level playing field in a global context,” Jørgensen said. As such, the EU must ensure the internal market is resilient, she added, pointing to the EU’s “trade instruments and other instruments to build an international level playing field as well.”

The EU levied anti-dumping tariffs against Chinese solar panels in the early 2010s and is also probing electric vehicle exports. While the EU official herself did not deliberately point at China, her fellow speakers had no such hesitancies.

“China is taking advantage of Europe and pushing their production here, selling us their components,” said Wanda Buk, vice president for regulatory affairs at the Polish utility PGE that sponsored the event.

Now was a “moment of truth” to put European industry first so as not to wake up “in a green but broke Europe,” she added.

Momentum for new kinds of auctions

In the short term, all eyes are on auctions. Currently, contracts for wind project developers are entirely awarded on price, with the cheapest offer winning the contract.

Jørgensen acknowledged that this was done because it is “easy” and results in more efficient use of taxpayer’s money.

But as the EU’s industry continues to suffer, the Commission is shifting its approach on auctions.

“An auction-based exclusively on price will not favour European manufacturers,” said the senior EU official. Nor would it “favour Europeans because it doesn’t give us the best longer-term solutions or the best long-term projects,” she stressed.

The official noted that competing on price “favours manufacturers from other parts of the world” and poses a risk to security, infrastructure, maritime spaces and sustainability.

As a result, future auctions will have to become “a little bit more complicated,” with a set of “pre-qualification” criteria, making it “clear that you have to respect the security, sustainability and quality requirements,” Jørgensen said.

This move away from price-based auctions offers another opportunity: boosting the roll-out of optimally integrated wind power plans.

“Go for the value of wind, not necessarily for the Terawatt hours,” said Georg Zachmann, a senior expert at the Brussels-based think-tank Bruegel, who spoke at the event.

EU countries are currently still considering their response to the Commission’s wind power package, with the next meeting of energy ministers scheduled on 19 December.

> Watch the full recording of the Euractiv event below: