Europe’s wind turbine makers are examining whether combining to create industry champions would help them confront Chinese competition in the race to supply the global wind power industry.
China’s and Europe’s wind turbine makers have each long held sway in their domestic markets but China’s manufacturers are developing an edge in fast-growing regions such as Latin America and the Middle East, as well as looking to gain ground in Europe.
This march into wider territories has fuelled European angst over its strength in strategic industries and prompted suggestions from some executives for the need to consolidate to create greater scale.
“I have great faith in European industrial capacity,” said José Manuel Entrecanales, chief executive of Acciona, the largest shareholder in Nordex, which sold the most turbines by capacity in Europe last year.
“We’ve got a number of opportunities — one of which is wind. [But] scale is the essence. [. . .] We believe that to gain the scale difference, consolidation is the only means.”
His remarks reflect the broader discussion among European policymakers and industry executives about how to create European champions and whether merger rules are too restrictive.
In April, the European Commission published long-awaited new guidelines for mergers and acquisitions, putting more focus on the benefits of corporate scale and urging competition officials to give greater weight to innovation, investment and resilience of the internal market.
After several previous mergers, Europe’s wind turbine industry is already relatively concentrated — between Nordex, Vestas, Siemens Gamesa and Enercon — leading to questions over what further tie-ups would be allowed.
“First of all, we need to clarify what it is we want from a political point of view,” said Entrecanales. It was “not worth” talking to rivals until then, he added. “Once we do that, then we can see what possible concepts are doable.”
Dealmakers in sectors ranging from telecoms to the space industry are looking for a changed approach to the merger control rules that would allow Europe to build more global corporate champions, although competition officials have publicly downplayed the idea of a revolution.
The new merger guidelines were one of the initiatives stemming from the landmark 2024 Mario Draghi report, aiming to boost European competitiveness and prevent the bloc countries from lagging in both the digital and energy transition.
“Companies in this sector will definitely jump on the guidelines to push through their consolidation plans,” said one EU official. “Whether this will work is yet to be seen.”
Not all experts believe scale is the answer. “Europe should be careful not to confuse size with competitiveness,” said Simone Tagliapietra, senior fellow at think-tank Bruegel. “The history of European industry suggests that consolidation alone is rarely a substitute for innovation, productivity and a genuine single market.”
But when it comes to wind power, European officials are desperate to avoid a repeat of the wipeout of much of its solar panel industry to Chinese competition, leaving the bloc heavily reliant on imports. China also dominates battery manufacturing.
As with solar, Chinese wind turbine manufacturers benefit from a huge domestic market. Suppliers such as Goldwind, Envision, Windey and Ming Yang hold 99.96 per cent of the market and installed 120 gigawatts of wind turbines last year — or more than 70 per cent of global new capacity.
Europe, by contrast, where its manufacturers supply about 94.5 per cent of the market, installed just under 20GW.
Mostly due to its domestic market, China’s largest turbine maker, Goldwind, installed more than double the capacity last year than the European champion Vestas, based in Denmark (30GW vs 14.5GW).
The vast scale allows for lower-cost production in China and the ability to undercut international rivals. Anecdotally, onshore wind turbines produced by Chinese manufacturers are 20-40 per cent cheaper in export markets where the two groups compete directly, said Andrea Scassola at the consulting firm Rystad Energy.
Denmark’s Vestas remains the largest turbine maker globally in terms of cumulative installed capacity.
But for the first time last year the top five manufacturers by annual new capacity were all Chinese, according to the Global Wind Energy Council trade group.
“[Western manufacturers] are pressured because all developers, the entire market, speak about the lower cost of the Chinese turbines,” said Sander Baksjøberget, analyst at Rystad.
European manufacturers had steadily become more reliant on sales in Europe and the US as they were pushed out of emerging markets, he noted.
Wood Mackenzie expects Chinese manufacturers to take 27 per cent of onshore capacity installed outside China over the next decade.
Europe’s wind turbine makers are still haunted by heavy losses in 2022 when they were squeezed by rising costs and pressure to keep turbine prices down by developers trying to win government tenders.
They have since recovered, with Vestas and Nordex’s shares up about 40 per cent and 90 per cent respectively over the past year; none want to put their recovery at risk by entering a price war with China.
William Mackie, analyst at Kepler Cheuvreux, said a tie-up between Vestas and Nordex might be too concentrated to pass merger authorities. However, a tie-up between Siemens Gamesa and Nordex was potentially more viable.
“The economies of scale appear in a number of dimensions,” he added. “You could argue around procurement, standardising product platforms, optimising maintenance schedules.”
Florian Mahler, a partner at law firm Clifford Chance who advises on renewable energy, argues that consolidation can also help boost spending on innovation — one of the focus areas for the new merger guidelines.
“There is always a need to build larger, more efficient wind turbines at a lower cost,” Mahler said. “If you have a very scattered market, it is very difficult to survive,” he said. “Otherwise you will lose at some point to the Chinese.”
Henrik Andersen, chief executive of Vestas, told the FT earlier this year that he “wholeheartedly” supported the principle of creating European champions — but also cautioned that the competition rules might get in the way.
“If [Entrecanales’] vision for a global champion should come true, it has to be under an exempt rule or new legislation,” he said. “Should you ever invite me to dance, I’m happy to dance. But we then have to have some [different] music playing.”
Additional reporting by Ian Johnston in Brussels
