EU plans to develop renewable energy sources at a great scale and consolidate European clean energy supply chains. However, the proposed Net-Zero Industry Act is insufficient and requires improvement. Its current provisions strongly limit the development of a European wind energy supply chain and enable Chinese turbine manufacturers to win an increasing volume of customers in Europe. Without clear support for European manufacturers the wind energy industry will be forced to build turbines using Chinese components, entailing great economic loss for the Old Continent.
Wind energy is crucial for energy security and Europe’s climate goals. EU wants wind energy to satisfy 43% of electricity consumption in Europe in 2030, compared to today’s 17%. This means the construction of 30 GW of new wind farms every eyar.
Almost all wind farms built in Europe to date use turbines manufactured in Europe. There are more than 250 facilities manufacturing turbines and components all over the continent. However, European wind energy supply chain already developed bottlenecks, in particular in the offshore sector. Offshore foundation manufacturers and installation vessels are booked for several years ahead. The wind energy industry must buy power cables, gearboxes, and even steel towers from China.
New factories are already under construction, but this is not enough to ensure mass expansion of wind energy so needed by Europe. We need great investments in production facilities, ports, networks, ships, cranes, and qualified personnel now.
Net-Zero Industry Act Needs Improvement
The necessary rapid expansion of wind energy European supply chains requires a coherent public policy and public financial support. EU seems to comprehend that, and therefore developed the Green Deal. However, its key element, Net-Zero Industry Act, is far from the sector’s needs and requires improvement.
Currently, European Parliament is working on amendments to Net-Zero Industry Act. One of crucial issues is the possibility to introduce non-price criteria for RES auctions. It will promote social, economic, and environmental value offered by European clean energy industry. Such criteria will encourage innovative solutions with respect to sustainable development, biodiversity protection, or security. Currently, exclusive application of the price criterion leads to developers bidding towards the lower limit of profitability, and even to payments for the right to build a wind farm, what generates additional costs — finally shifted to final customers.
The current wording of the document does not specify what non-price criteria are in play. However, it refers to “supply chain resilience and diligence”, what may be construed as additional score for developers offering European, local technology, equipment resistant to cyber attacks and high HSE standards.
No Changes Will Bring Costly Consequences for Europe
The current provisions of Net-Zero Industry Act strongly limit the development of a European wind energy supply chain and enable Chinese turbine manufacturers to win an increasing volume of customers in Europe. This is due to lower turbine prices, less restrictive standards, and non-conventional financial conditions, including payment after construction of a wind farm or even later. We are facing an actual risk that expansion of European wind energy will take place in China, not in Europe, leading to serious threats in the future.
Setting aside new network of dependencies arising exactly when we are attempting to improve Europe’s energy security, the economic losses would be tremendous. The latest data demonstrate that in 2022 the European wind energy industry, employing 300,000 people, contributed EUR 42 billion to the EU’s GDP. Each new turbine installed in Europe generated on average EUR 11 million in business activity. Wind energy industry paid EUR 7 billion in taxes, including local taxes contributing to local communities living in the vicinity of wind farms.
Europe Must Become Competitive
Poland is among countries where decarbonisation constitutes one of the main objectives of the climate and energy policy, and wind energy is one of the pillars of the planned transition of the Polish power system. Wind development in Poland has a substantial impact on GDP, labour market and prospects for production facilities. Implementation of such projects will only increase the activity of Polish companies throughout the supply chain. This is why key facilities, such as Vestas wind turbine factory in Szczecin or ARP S.A., Baltic Towers and GRI Renewable Industries offshore tower factory, are being built in Poland.
We cannot forget the construction of the offshore wind farm installation terminal in Świnoujście, which in the future will attract subsequent investments. Such measures increase local content, i.e. accumulate investment revenues in the domestic economy, contributing to energy security of the EU.
In Poland, local content is particularly important in offshore context. However, we cannot forget that onshore wind will also provide great economic value to our country. Currently, the share of Polish enterprises in implementation of onshore projects is 55–60%. The launch of new investments following the liberalisation of the so-called 10 H rule will further contribute to the development of the sector and may increase local content to 75%. In accordance with the available analyses, the return of the onshore wind sector to dynamic growth path will enable the achievement of the following economic effects in the 2030 perspective:
- Additional revenues for local government budgets from PLN 490 to 935 million,
- 51 to 97 thousand new jobs,
- Guaranteed PLN 70–133 billion increase in GDP,
- Secured PLN 80 billion of contracts for products and services in the supply chain (75% of which will contribute to the national economy).