The European Commission plans to put forward a European wind energy package on Tuesday (October 24), aiming to boost the EU wind energy industry by solving the challenges it faces, according to leaked drafts seen by Euractiv.
Wind power is seen as essential to replacing fossil fuels and boosting domestic energy production, but the European Union is lagging behind on installing it if it wants to meet its 2030 climate and energy goals.
“Wind energy is renewable, plentiful in the EU, and safe. It is crucial to achieving the EU’s decarbonisation targets and providing clean, affordable and safe electricity to our households, our industry and increasingly our transport sector,” according to one of the leaked drafts.
But despite its importance and the demand for more renewable energy sources, this sector faces difficulties. All major wind turbine manufacturers reported significant operating losses in 2022, the leak, citing the International Renewable Energy Agency, warned.
“The EU cannot double the pace of wind energy deployment without a healthy, sustainable and competitive wind energy supply chain. The draft action plan warns that the wind energy industry cannot be healthy without a clear and secure pipeline of projects, which attract the necessary financing and compete on an equal footing for globally, and calls for “immediate action.”
The European Wind Energy Package aims to solve these issues through a “Wind Energy Action Plan” and a Communication on “Realizing the EU’s offshore renewable energy ambitions”.
The draft documents, seen by Euractiv and subject to change before publication, outline what the EU has done to boost wind and offshore renewable energy, including new laws and funds, and what additional steps are needed to help the industry.
The draft action plan addresses supporting European companies in the wind energy sector and improving their competitiveness through measures that “should be taken urgently.”
It identifies five difficulties facing European wind equipment manufacturers:
- “Insufficient utilization of production capacity, driven by insufficient and uncertain demand for wind turbines in the EU,” with the industry estimating that 80 GW of capacity is currently stuck in permitting procedures, most of it for years.
- “High inflation and commodity prices, coupled with limited hedging by wind energy equipment manufacturers against input price fluctuations,” are eroding the sector’s finances.
- Design national support with a focus on price criteria rather than environmental and social criteria in European products and supply chain resilience.
- Pressure from international competitors, including China, an important supplier of raw materials and components to the EU and an increasingly serious competitor globally.
- The availability of skilled workers in the wind energy manufacturing sector threatens to impact the speed of European production capacity, especially in offshore wind energy.
Redesigned wind auctions
One focus of the action plan is to design auctions for new wind generation capacity that do not prioritize cheaper bids, where Chinese manufacturers have an advantage over European companies.
The idea is to encourage “non-price award criteria that reward products with the highest added value and promote industrial expansion that can better support an innovative and competitive wind manufacturing industry,” the draft document says.
Brussels also wants more consistent auction designs, with “non-discriminatory pre-qualification” criteria that consider emerging issues such as cyber resilience among others.
The European Commission will launch a dialogue between EU countries, industry players and other stakeholders to improve and simplify auctions. Accordingly, the European Commission will adopt the directives by the end of March 2024.
Besides, the EU executive will work with the wind industry to “closely monitor potentially unfair trade practices that benefit foreign wind manufacturers,” including potential subsidies for wind-related products entering the EU.
“If warranted, the Commission will activate its trade defense tools,” the main document warns.
It will also look at helping manufacturers access markets outside the EU, enhancing skills and increasing access to EU funds.
Allow and networks
The action plan also seeks to improve permits and network capacity. This includes the possibility of extending temporary rules aimed at easing red tape “to send a strong signal to industry and member states about the need to accelerate the deployment of wind and other renewable energy sources.”
Alongside this, the European Commission will launch “Accele-RES”, an initiative aimed at accelerating the implementation of the new renewable energy law, especially when it comes to permits. This may be key because the previous Renewable Energy Directive dating back to 2018 has not yet been fully implemented.
In addition, the EU executive will launch a “dedicated online tool to support Member States in the permit issuance process” by the end of the year. By April 2024, it will update its Recommendation on Accelerating Permitting Procedures for Renewable Energy Projects and Guidance on Good Practices for Accelerating Permitting Procedures.
The action plan also looks to create more certainty for project developers and manufacturers by calling on EU countries to develop detailed implementation plans for the new renewable energy law and increase visibility on upcoming wind projects.
This initiative will be complemented by an “Action Plan to Facilitate Network Building,” expected to be presented in November 2023.
This will help accelerate major cross-border electricity grid projects that are “critical for integrating increasing amounts of renewable energy sources and enhancing energy system integration.” The document says it will also include measures to address bottlenecks that hinder network strengthening and expansion.
Enhancing offshore wind
The wind energy action plan will be published on Tuesday alongside a message on realizing Europe’s offshore renewable energy ambitions.
“Marine renewables are set to become an indispensable part of the energy mix that will be essential for decarbonisation and reaching climate neutrality,” according to the leaked draft proposal.
“In 2022, the cumulative installed offshore capacity of the EU27 was 16.3 GW. To close the gap between the 111 GW committed by Member States and installations in 2022, we must install almost 12 GW per year on average. This is ten times more than the 1.2 GW Which was installed in 2022.
The letter identifies similar issues to those in the business plan, including permits, skills, supply chains and squeezed profit margins.
It looks at developing cross-border maritime networks, supporting innovation, accelerating traceability permits, improving maritime spatial planning, enhancing infrastructure resilience in the wake of the Nord Stream gas pipeline sabotage, and securing supply chains.
The plan also seeks to ensure that EU countries exporting renewable energy to other EU countries are properly rewarded for doing so, and the Commission is currently evaluating ways to share the benefits.
(Editing by Frédéric Simon/Zoran Radosavljevic)