Offshore Wind Park

Keeping 1.5° Celsius in reach requires a huge rise in renewables

Our products and services are supporting the drive to more sustainable energy sources

„The road ahead for the entire wind industry is long. But we can – and we will – walk it to create a more sustainable future.”

Jochen Eickholt, CEO Siemens Gamesa Renewable Energy

Specific challenges and solutions

Never before has the development of wind energy been so dynamic. Never before have so many projects been put out to tender. Despite this, European wind turbine manufacturers are facing a huge challenge. Cost pressures, high prices for steel, and ever-faster development cycles are creating a perfect storm for the wind industry. And this, despite the fact that the wind industry plays an essential role in ensuring clean energy security. It should therefore be regarded as a strategic industry for ensuring Europe’s energy resilience. Five points are crucial – which can also be applied outside  Europe:

1. Speed up permitting procedures for renewable projects: 80 GW of wind projects await approval in Europe. It is now in the hands of the member states to adopt, as soon as possible, streamlined permitting procedures for renewable energy projects and the necessary grid infrastructure across Europe. Accelerating the approval of the existing pipeline of projects will boost economic activity, strengthen supply chains, and provide a solid foundation for investment in new manufacturing facilities that are consistent with climate goals. And speedy procedures will ultimately help achieve the necessary 30 GW per year increase, rather than the originally planned 16 GW.

2. Recognize and actively support the value of European wind manufacturers: Wind technology combats climate change, creates wealth, and increases energy security. Much more attention must be given to these benefits in auctions, as proposed in the Net Zero Industry Act. By the end of 2023, mandatory non-price criteria should be the norm in every auction, both as pre-qualification as well as qualification criteria. And the value we bring, comes at a cost.

3. Remove additional burdens on the industry, avoid race-to-the-bottom competition: Inflation adjustment mechanisms and a clear end to negative bidding are urgently needed. The high level of inflation in prices of raw materials, logistics, and other costs have increased the price of wind turbines by up to 40 percent over the past two years. As a result, the auctions urgently need an inflation adjustment. Indexing the prices paid for wind energy – as some member states are doing – is a good approach, but it is not enough. Additionally, we also call  for a clear end of negative biddings in auctions: these costs will be shifted to the supply chain and, ultimately, also to consumers.

4. Secure funding and financing for robust supply chains: This is essential for Europe's competitiveness and for the success of the energy transition. The European wind industry is not financially strong enough to build the capacity required to meet our climate targets. That is why we urgently need more flexibility in government support. This includes significantly higher co-financing rates for activities like expanding existing plants. In addition, neither industrial champions nor small or medium-sized enterprises have sufficient access to financial guarantees and programs e.g. by the European Investment Bank (EIB) will be required if we want to scale the number of projects up fast.

5. Ensure fair competition and trade agreements to lead the global climate agenda and secure strategic interests: It is important to defend fair competition on the basis of three pillars: First, enable the full use of European trade defense instruments to ensure a level playing field in the market and access to key sources. Second, enhance the European Bank for Reconstruction and Development toolbox or the Global Gateway initiative by tying aid to EU industrial policy objectives. Third, enter into targeted bilateral trade partnerships to accelerate the uptake of clean technologies and strengthen the resilience of their supply chains. This should include an alignment of standards and regulations.