The deal comes as China finds itself at a kind of domestic clean energy crossroads, in terms of both supply and demand. On the former, the country has launched a campaign aimed at softening the cutthroat domestic competition, overproduction, and price wars that have defined many of its green industries, especially electric vehicles.
At the same time, China is setting out to alter its electricity markets to put renewable energy on a more market-based footing, while also paying coal-fired power plants to stay on the grid, as University of California, San Diego researcher Michael Davidson explained on a recent episode of Shift Key. These changes in electricity markets will reduce payments to solar and wind producers, making foreign markets potentially more attractive.
“We anticipate Chinese original equipment manufacturers will intensify their push toward international expansion, with Mingyang’s planned investment a signal of this trend,” Morningstar analyst Tancrede Fulop wrote in a note to clients. “This poses a challenge for Western incumbents, as Chinese players can capitalize on their cost advantages in a market driven by price.”
Ironically, Fulop said, the market changes will make the Chinese market more like Europe’s, which has become more price conscious as the market has matured and reductions in cost have slowed or outright stopped. “The transition is expected to make renewable developers increasingly price-sensitive as they seek to preserve project returns, ultimately weighing on wind turbine manufacturers’ profitability,” he wrote.
There’s a “cliff” coming in Chinese renewable energy deployment, Kyle Chan, a postdoctoral researcher at Princeton University, told me. “Overall, the net effect is expected to be a pretty sharp drop, and we’re already starting to see some of the effects of that.”
And turbine manufacturers would not be the first Chinese renewable industry to show up in Europe.
“There’s already an existing model” for Chinese manufacturers to set up shop in Western countries, Chan said. Chinese companies are already planning to manufacture solar modules in France, while Chinese EV maker BYD’s is planning factories in Hungary, Turkey, and potentially Spain.
China as a whole is responsible for over half of all new offshore wind capacity added in 2024, according to Global Energy Monitor, and has been growing at a 41% annual rate for the past five years. The energy intelligence firm Rystad estimates that China will make up 45% of all offshore wind capacity by 2030. Ming Yang itself claims to be behind almost a third of new offshore wind capacity built last year.
Meanwhile, offshore wind projects in the West — especially the United States — have faced the omnicrisis of high interest rates, backed-up supply chains, and Donald Trump. News of Ming Yang’s Scotland factory sent yet another shock through the ailing Western offshore wind market, with shares in the Danish company Vestas down 4% when the market opened Monday.
But with Chinese products and Chinese investment comes controversy and nerves among European political leaders. “There’re questions about tech transfer and job creation,” Chan said. “They also face some security issues and potential political backlash.”
In August, the German asset manager Luxcara announced that it would use Siemens Gamesa turbines for a planned offshore wind project instead of Ming Yang ones after backlash from German defense officials. “We see this as further evidence that a Chinese entry into the European wind market remains challenging,” analysts at Jefferies wrote to clients in August.
They were right to be skeptical — Chinese turbines’ entry into the European market has been long predicted and yet remains unrealized. “China’s increasingly cheap wind turbines could open new markets,” S&P Global Insights wrote in 2022, citing the same cost advantages as Morningstar did in reference to the Ming Yang factory announcement.
“China was already trying to angle into the European market,” Chan told me, seeing it as comparable to the U.S. in size and potentially more open to Chinese investment. “If they were kind of thinking about it before, now it’s gotten a greater sense of commercial urgency because I think the expectation is that their profit margins are really going to get squeezed.”
While China leads the world in building out renewable energy capacity domestically and exporting technology abroad, it has “decided not to decide” on pursuing a rapid, near-term decarbonization, Johns Hopkins University China scholar Jeremy Wallace recently argued in Heatmap.
While that means that the Paris Agreement goals are even farther out of reach, it may be fine for Chinese industries, including wind, as they look to sell abroad.
“Chinese firms have lots of reasons to want to build things abroad: Diversification away from the Chinese market, the zero or negative profits from selling domestically, and geopolitical balancing,” Wallace told me.
“If Brits want to have their citizens making the turbines that will power the country,” Wallace said, “this seems like a reasonable opportunity.”
BYD
Ethane exports are rising as export capacity soars.EIA
