Wind is a proven, mature, abundantly available renewable technology with an extensive global supply chain. Wind is also one of the predominant sources of power generation required to achieve the EU’s 2030 renewable energy target, which following the Fit for 55 revision has now increased to 42,5% with ambition to reach 45%.
A record 16 GW wind capacity were installed in 2022 (47% more than in 2021), providing 16% of the EU’s electricity generated in 2022. However, the European wind energy supply chain is at a crossroads. Despite ambitious targets of 420 GW of wind energy by 2030, the industry’s reality is far from this vision and the sector is now facing difficulties in operating profitably and competitively.
This situation requires immediate action. This is why, on 24 October, the Commission unveiled its Wind Power Package. It outlines a series of actions that can be taken quickly to strengthen Europe’s wind energy industry and its competitiveness, and that we will summarize in this blog.
Some of the actions are for the EU, some for the Member States and some for the industry. Together these actions are expected to be a game-changer for Europe’s wind industry and for Europe’s ability to meet its climate and energy goals.
But first, why is the wind supply chain struggling?
- Insufficient and uncertain demand for wind turbines.
- Permitting bottlenecks.
- Difficult access to raw materials, high inflation and commodity prices.
- Poor auction design.
- Pressure from international competitors.
- Unavailability of skilled workers.
Title: Average producer price for selected technologies, Q1 2015 to Q2 2023 Title: Inflation in selected regions, January 2015 to October 2023
The Wind Power Package sets out measures that should be urgently taken in other to solve the problems mentioned before. It is structured into six main pillars and fifteen concerted actions by the European Commission, Member States and the industry: (i) acceleration of deployment through increased predictability and faster permitting; (ii) improved auction design; (iii) access to finance; (iv) creating a fair and competitive international environment; (v) skills; and (vi) industry engagement and Member State commitments.
Action 1: Commission and Member States to work together in order to accelerate permitting.
The Commission will launch the “Accele-RES” initiative, which will consist, among other things on prioritize the acceleration of permitting through digitalization of national permitting processes, as well as, supporting the roll-out of training for national permitting authorities; launch a dedicated online tool to support Member States in the permitting process; update the Recommendation the Guidance on good practices to speed up permit-granting procedures for renewable energy projects; upgrade the informal expert group on permitting to a dedicated forum to regularly exchange best practices and identify remaining obstacles.
Action 2: Member States to increase visibility of the wind projects pipeline through wind pledges, publication of mid-term auction schedules, long-term plans for renewables deployment.
The Commission will ensure the visibility and predictability of national plans for renewables deployment, by ensuring the implementation of the relevant RED provisions and deploying transparent digital tools on which the auction planning of the Member States will be published. This will ensure higher visibility of upcoming auctions and expected deployment volumes and allow companies to have a single point of information for all auctions planned in the EU.
Action 3: Commission to adopt an action plan to facilitate grids build-out.
The Commission will adopt an action plan for grids that establish measures to address bottlenecks hampering grid reinforcement and expansion, including cross-border cost sharing, and manufacturing, which are crucial to help to unblock a larger number of onshore and offshore wind projects, trigger investment in wind projects in coastal Member States and transport infrastructure towards landlocked regions in Europe and in this way create additional demand for wind equipment.
Action 4: Member States to include in their auctions objective, transparent and nondiscriminatory qualitative criteria and measures to maximize the execution rate of the projects, supported by Commission recommendation and guidance.
The Commission will launch a dialogue with Member States and stakeholders to improve, simplify and provide consistency in the design of renewable energy auctions in order to address shortcomings resulting in project delays or abandoning. The dialogue will lead to the adoption as soon as possible of a Commission recommendation and guidance that aim to provide suggested standard elements to auctions in full complement arity with the NZIA (Net Zero Industry Act).
Action 5: Tackling cybersecurity risks and addressing data protection aspects.
The Commission will identify cybersecurity risks relevant to wind energy installations and related infrastructure, including data protection aspects, complementing the Network Code on the cybersecurity of cross border electricity flows planned for adoption in Q1 2024, and in view of assessing procurement processes and auction design, further policy making as well as the screening of foreign direct investments.
Action 6: Commission to increase the use of strategic procurement in the context of the Global Gateway.
The Commission will propose to increase the use of strategic procurement in the context of the Global Gateway, launched in December 2021, through which the EU invests in a ‘Team Europe’ approach, in clean energy. This will ensure that projects are up to high environmental, social and governance standards and will allow contractors and producers who meet these standards to find a viable business case while promoting sustainable development in emerging markets and developing economies.
Action 7: Commission to facilitate access to EU financing.
The Commission will expand the possibility for support for wind energy manufacturing under the Innovation Fund namely by doubling the budget for financing clean technology manufacturing projects to EUR 1.4 billion. Wind energy projects should also get priority for the EUR 90 million of Innovation Fund project development assistance that will be provided in cooperation with the European Investment Bank over the next 3 years.
Action 8: EIB (European Investment Bank) to provide de-risking tools and guarantees for EU wind companies.
The Commission and the EIB are jointly working on a dedicated instrument, to be launched in the coming 3-6 months, to counter guarantee commercial banks’ credit exposures to key wind industry suppliers, increasing access to advance payment and performance guarantee lines. This will alleviate the financial pressure resulting from a growing order book exacerbated by macroeconomic challenges, including rising inflation, interest rates as well as significant supply chain disruptions.
Action 9: Member States to make full use of flexibility provided under State aid rules for EU wind value chain.
A decision on the possible prolongation the TCTF (Temporary Crisis and Transition Framework), due to expire by the end of 2023, is under the table. The TCTF allows until 31 December 2025 for investment aid in the manufacturing of strategic equipment for the transition towards a net zero economy, including among others wind turbines and their key components and related critical raw materials.
Action 10: Commission to strengthen the dialogue with investors to foster the attractiveness of investments in the EU’s wind sector.
Still within 2023, in the context of the Investors Dialogue, the Commission will organize dedicated meetings with long term investors to better understand the main obstacles hindering the attractiveness of investment in the EU’s wind sector and the best ways to address them.
Action 11: Commission to facilitate EU manufacturers’ access to foreign markets.
The Commission will further intensify negotiations on trade agreements that would strengthen the position of EU companies, including in the wind sector, and ensure undistorted access to foreign markets. The EU will equally work with its partners in the World Trade Organization to develop the rulebook on subsidies with a view to increasing transparency on state intervention and avoiding the subsidy race.
Action 12: Protect the internal market against trade distortions and threat to security and public order.
The Commission will make full use of the cooperation mechanism under the Foreign Direct Investments Screening Regulation to prevent possible threats to security and public order related to foreign investments in the EU wind industry.
Action 13: Enhancing standardization in the wind energy sector.
To promote the adoption of EU and international standards for the wind sector the Commission will request the European Standardization Organizations to draft European standardization deliverables in support of the objectives of the NZIA.
Action 14: Large scale skills partnerships for renewable energy to design projects that support skills development for the renewable energy sector, including wind.
The Commission will identify those EU programs and skills initiatives that offer the best framework and that enable mapping of the skills needs in the sector, review job profiles, elaborate and operate new labour market relevant training modules and related material and/or support the development of skills urgently needed in the renewables sector targeting in particular women, young people and older people.
Action 15: EU wind charter.
The Commission invites Member States and wind industry representatives to sign up before the end of 2023, to voluntary commitments as part of a wind charter. The objective of the charter is to align and swiftly implement the actions of the Commission, Member States and industrial stakeholders while demonstrating a common and coordinated effort to improve the enabling conditions for the European wind industry.
The EU has a solid manufacturing base and many robust wind farm developers with global reach. The sector has great innovating power and ingenuity and is a fertile ground for developing new skills. European companies active in the wind sector are crucial actors in the ongoing transformation of our energy system and reaching our ambitious climate and energy targets. Alongside other net-zero industries, the wind industry makes the EU well-equipped for transforming towards the clean and circular economy of tomorrow.
This is why the European wind industry must scale up and invest now to let the EU industry and citizens seize the opportunities of the European Green Deal and decarbonization efforts worldwide. To make this possible, the industry needs more predictability and a clearly visible, solid project pipeline. It requires a robust business model that ensures appropriate profitability and access to finance to grow and attract investors. It needs expanded and strengthened grids to integrate its energy. And it requires fair competition.
This action plan aims to concrete results already in the coming months. Implementation of this action plan by the EU, Member States and industry will support the European wind manufacturing sector in overcoming the difficulties and improve its competitiveness to ensure that this sector fully contributes to the ongoing energy transition.
Matilde Loureiro | Head of Operations