Offshore wind targets from European governments are skyrocketing, adding pressure and haste to an already tight supply chain. Recent market movements suggest Chinese suppliers are looking to fill this supply gap, gaining credibility by successfully supplying from factories abroad before potentially establishing more permanent manufacturing hubs within the region.
MingYang is one such supplier, having made a savvy entrance into the Italian market in early 2021 by securing a contract for ten turbines for the Taranto wind project. By the end of that year the company had penned a Memorandum of Understanding (MoU) with the UK government, a document which established a framework for MingYang to construct a blade manufacturing factory in the UK as well as a service center for its offshore operations. The MoU also mentioned the potential for the Chinese supplier to construct a turbine assembly site in the country at some point in the future. By July of this year, MingYang was publicly listed on the London Stock Exchange. And in September, MingYang’s relationship building efforts showed signs of bearing fruit when the company was awarded the contract to supply turbines for Hexicon’s flagship development in the Celtic Sea, TwinHub. The TwinHub floating windfarm may be small in terms of capacity, but the test site will serve as an important door-opener in advance of the UK’s large scale Celtic Sea auction, expected to open for bids in June 2023. Small steps, but potentially signs of a broader trend.
Turbines aside, European foundation demand faces even tougher odds with ever lengthening lead times, and Chinese supplier Dajin Heavy Industries appears poised to respond. In June the company won a contract to supply 48 monopiles to Scotland’s Moray West wind farm. The victory was quickly trumped in October, when Dajin secured a contract to supply French wind farm Iles d’Yeu et de Noirmoutier with 62 monopiles. This is further supported by news over the summer that Dajin may be interested in acquiring the former ST3 Offshore foundation manufacturing plant in Szczecin, Poland. Chinese companies have been supplying jackets to the European market for several years now, but Dajin is the first Chinese monopile supplier to secure contracts in Europe since ZPMC’s monopiles at the Greater Gabbard wind farm were found to have faulty welds in 2010, resulting in years of litigation and delays.
Chinese cable suppliers have had a foothold in the European market since 2018, when Hengtong won the contract to supply Portuguese project WindFloat Atlantic with an 18 km HVAC export cable. ZTT followed up in December 2020 by winning two contracts in Germany to supply HVAC cables to both Gode Wind 3 and Kaskasi. And in August, the X1 Wind floating prototype project in the Canary Islands confirmed that it’s 20kV dynamic cable was supplied by Hengtong.
Raw materials have grown increasingly more expensive, weakening traditional European turbine suppliers and in turn forcing developers to look for alternatives elsewhere. MingYang is unlikely to build a factory in Europe until it can secure a contract to supply a significant number of turbines, well in excess of the smaller projects where it has thus far succeeded. Without a factory in Europe, MingYang must ship its turbines from China, which carries additional cost and a higher carbon footprint.
Given the relatively over supplied offshore wind market in China and their lower manufacturing cost base, Chinese suppliers are increasingly well positioned to address the supply gap in Europe. Recent contracts suggest this movement is already underway, as Chinese suppliers first deliver on orders from factories China, and then potentially establish European facilities.