The UK, wind and China

TL;DR

• The UK is looking to rapidly expand its wind energy capacity, both onshore and offshore. By 2030, it hopes to double onshore wind and quadruple offshore wind.

• Meeting this goal will require more investment and more turbines. This has already started with Scottish Power awarding a £1 billion contract to Hull-based Siemens Gamesa.

• China dominates the global wind energy sector. Its wind power industry accounted for two-thirds of the world’s wind power build in 2023, and it is responsible for providing between 70-80% of the core components needed to build turbines.

• This growth hasn’t been achieved without controversy. China’s steel industry is essential to turbine manufacturing yet is reliant on fossil fuels, while the Government has provided subsidies that allow Chinese manufacturers to outbid European competitors, and most of the energy produced remains within the country.

• While China has invested in several UK-based projects and a partnership with Mingyang has been given the go-ahead, several commentators are concerned about the risks to energy security, intelligence and the UK’s burgeoning homegrown industry.

The detail

While it might not make the UK an ideal holiday destination, the country’s climate is ideally suited to wind power.

It is the one natural resource that can be easily exploited to power the energy transition, moving away from fossil fuels towards renewable energy generated by onshore and offshore wind farms. In fact, growing the UK’s wind energy sector is a key ambition of the new Labour government. It aims to double onshore wind and quadruple offshore wind by 2030. That means onshore wind capacity would increase from 15 to 30GW.

However, meeting these targets won’t be a quick fix. With just five years to go – and with offshore windfarms typically taking 10 to 15 years to build – there needs to be a substantial overhaul of planning and deployment processes, as well as a rapid expansion of the grid if the country is to have any hope of meeting its goals.

Positive steps have already been taken. One of Keir Starmer’s first acts as Prime Minister was to remove the de facto ban on onshore wind. Meanwhile, Great British Energy, which has £8.3 billion in state funding, has partnered with the Crown Estate to lease seabed on which windfarms can be developed and built.

More recently, Siemens Gamesa in Hull has been enlisted to supply wind turbine blades for Scottish Power with a contract worth more than £1 billion. It is set to manufacture blades for 64 turbines, which will be installed at the East Anglia TWO windfarm off the Suffolk coast. Once operational, this windfarm will be able to power more than a million homes, while two further farms being developed off the coast of Norfolk and Suffolk could supply renewable energy to more than three million homes. Each of the blades will be 115 metres long and built about 20 miles out to sea. The contract ensures job security for the factory’s 1,300 employees and Scottish Power’s plan to double its UK investment (from £12 billion to £24 billion by 2028) is sure to boost the UK’s supply chain.

The China question

While these moves have been largely celebrated, one potential way forward has triggered a series of lively debates.

China is the undisputed world leader in wind power. The country has undergone a green revolution in recent years, reducing its reliance on coal and gas while adding record-breaking amounts of new solar and wind power. In 2023, China installed 293GW of wind and solar capacity and by 2024, its solar and wind capacity outstripped its coal-fired electricity capacity. It’s a welcome shift and one that is necessary if the world is to win the fight against climate change – after all, China is responsible for about a quarter of all global carbon output.

When it comes to offshore wind, it is predicted that China will have 40GW of capacity by 2030 and will likely become the world’s largest offshore wind market – thanks, in large part, to an investment of £100 billion from the Chinese government. Its wind power industry accounted for two-thirds of the world’s wind power build in 2023 and the total capacity of its portfolio is now 77GW, 10 times more than the US in second place.

It is perhaps unsurprising, therefore, that China also dominates the wind power supply chain. Just one company, Beijing-based Goldwind, built 16GW of onshore and offshore turbines in 2023, which is nearly equivalent to the UK’s entire windfarm stock. Globally, China provides 70-80% of the core components needed to build turbines and refines almost 100% of the critical minerals required.

Subsidies and steel

These statistics are impressive, but the means China has used to reach these ends have sparked concerns internationally.

It’s worth noting that the Chinese government has invested heavily in developing its wind energy sector. Its total industrial policy spend comprised at least 1.73% of its total GDP in 2019, more than four times that of the US. To promote the industry, it has enforced localisation requirements, used a feed-in-tariff and employed substantial direct and indirect subsidies. In 2021, for example, Guangdong province issued subsidy standards for grid-connected offshore wind projects at 1,500 renminbi per kilowatt.

This aggressive investment could represent a global net positive, but some are concerned that the wind industry is almost entirely powered by Chinese constructors, rather than opening contracts to suppliers worldwide, and the power generated is also kept in-house. Bloomberg reported that 98% of the capacity added by Chinese turbine manufacturers was used for domestic projects. Vestas is the only European manufacturer that has secured contracts for Chinese projects and most western manufacturers can’t match the competitive pricing offered by Chinese companies, perhaps due to the government’s subsidies.

Building out China’s wind industry has also not been without environmental cost. While it may still be more desirable than fossil fuel alternatives, the steel used to manufacture turbines relies on blast furnace-basic oxygen furnaces, which use coal for 90% of their production processes. Coal is still heavily subsidised in China and, in 2023, the country built 70GW of new coal-fired capacity, 95% of the worldwide total.

A China-UK coalition

Chinese involvement in the UK’s wind industry isn’t a new development. In September 2013, the then-Energy and Climate Change Secretary, Ed Davey, signed a Memorandum of Understanding with China that set out to remove the technological and market barriers for both the UK and China to accelerate their wind power development. Since then, an annual UK-China Energy Dialogue has taken place to jointly facilitate projects such as installing, operating and maintaining deep sea fixed and floating offshore wind projects, energy storage design and deployment, carbon capture, utilisation and storage, and smart grids.

The partnership has been mutually beneficial. With support from the government, several UK companies have provided an estimated £1.2 billion in renewable energy exports to over 30 Chinese projects since 2017. For example, Oxford-based Anakata Wind Power Ltd installed its innovative wind turbine blade enhancements on a turbine on China’s Gansu Changma windfarm, which has the potential to improve energy output by 10%.

In return, China has committed equity investment into UK offshore wind projects. Its State Development & Investment Corporation (SDIC) invested in the Beatrice and Inch Cape offshore wind projects in 2016, the Aftron onshore project in 2020, and the Benbrack onshore windfarm in 2021.

That’s not all. The China National Offshore Oil Corporate partnered with the UK’s Flotation Energy to co-develop Green Volt, a floating offshore wind project, which will be used to electrify the Buzzard oil rig in Scotland and is expected to be the world’s biggest floating project once online in 2026. In December 2021, the Department for International Trade also entered a partnership with Mingyang Smart Energy Group to support Mingyang’s ambition to build a turbine blade and assembly factory in the UK. Mingyang is China’s largest wind turbine firm and sells a range of typhoon-resistant turbines.

Even so, not everyone is onboard with Chinese intervention in the UK’s wind energy sector. Those who have security concerns point to the fact that the electronics and data in a turbine are ultimately controlled by the company that made them, rather than the windfarm developer, which could allow for political interference when turbines are manufactured overseas. The SNP’s Stewart McDonald also raised concerns about the priority status given to Mingyang and plans for it to supply equipment to North Sea windfarms.

China’s dominance and the inroads it has made in the UK and Europe have sparked reactions. The EU launched an anti-trust investigation into Chinese turbine manufacturers and in April 2024, the European Commission opened probes to discover whether Chinese wind turbines are disrupting fair competition in five EU countries. In October 2023, the Commission also launched a new Wind Power Package to help strengthen the European wind industry and level the playing field.

While there are undoubtedly advantages to welcoming Chinese technology and investment into the UK wind energy industry, the risks may outweigh the positives. Not only does it reinforce China’s dominance, but it runs the risk of swapping the energy security threat represented by Russia (which came to light during its invasion of Ukraine) with another potential threat for the future.

It could also devalue homegrown manufacturing. Companies like Siemens Gamesa can’t compete with the subsidised prices offered by their Chinese rivals and so need support from the UK government and UK-based energy companies – via contracts such as the Scottish Power deal in Hull.

This will not only provide jobs and boost the economy, but it will also channel growth into areas that are reliant on the fossil fuel industry, chiefly the North-East of England and Eastern Scotland. If the energy transition is to be a success, these legacy industries need to be replaced with renewable alternatives that will continue to employ local people and support the local economy.

Importing from abroad may be a quick fix, but the long-term impact could undermine the creation of a sustainable UK wind sector and, ultimately, prevent the country from transitioning to renewable energy in an equitable and just way.

— Lew 👋

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The Transition’s work is provided for informational purposes only and should not be construed as advice in any capacity. Always do your own research.