(The opinions expressed here are those of the author, a

columnist for Reuters.)

*

Chinese firm dominate wind supply chain from turbines to

magnets

*

Europe weighs allowing Chinese firms access to

infrastructure

*

Britain to decide on future of Ming Yang's Scotland plant

By Ron Bousso

LONDON, Oct 23 (Reuters) - European governments seeking

to expand offshore wind power are increasingly wary of Chinese

companies' involvement. Countering China's dominance will be

time-consuming and expensive, but political pressure and

national security concerns may give the region little choice.

Offshore wind is a cornerstone of northern Europe's clean

energy strategy, offering a reliable alternative for more windy

and less sunny countries striving to cut greenhouse gas

emissions and reduce reliance on imported fossil fuels.

Since Russia's invasion of Ukraine in 2022, Europe has

dramatically slashed its purchases of Moscow's oil and gas, but

it has mostly replaced this with imports of U.S. liquefied

natural gas, meaning it has traded one dependence for another.

However, wind technology also relies on a foreign power,

given China's central role in the wind power supply chain from

rare earth magnets to turbines and blades. The role of China in

this sector has become a source of debate between European

governments and the industry.

Nowhere more so than in Britain, which aims to triple its

offshore wind generation by 2030 to between 43 and 50 gigawatts

from around 15GW today.

Chinese wind turbine manufacturer Ming Yang Smart Energy

announced on October 10 plans to invest up to $2 billion in a

plant in Scotland, just a month after Britain's largest

electricity supplier Octopus Energy signed an agreement with

Ming Yang to explore opportunities to develop 6 GW of wind.

In its announcement, Ming Yang said the turbine

manufacturing facility at Ardersier still requires the British

government's approval.

TRICKY TIMING

Prime Minister Keir Starmer faces a challenging decision.

Approving this major wind deal should support the government's

green energy ambitions and hopes to tighten trade relations with

Beijing, but it also risks running afoul of the growing push for

energy nationalism.

Ming Yang faces no direct allegations that it poses a

security threat.

Starmer's government already faces political backlash from

prosecutors' decision earlier this month to abandon the trial of

two British men charged with spying for China in parliament. At

the same time, U.S. President Donald Trump has urged countries

to avoid doing business with China as trade tensions between the

world's two largest economies deepen.

Beijing, on its part, is unhappy with the British

government's continued delays to approve plans for a new Chinese

embassy in London.

So while Britain might welcome Ming Yang's investment on

economic grounds, giving a Chinese firm a central role in the

development of critical UK energy infrastructure is bound to

spark further political debate.

GONE WITH THE WIND

Britain is not the only country rethinking China's role in its

wind industry. The European Commission last year launched a

review into Chinese turbine manufacturers in response to

industry concerns that cheaper imports could threaten the

competitiveness of European firms.

Additionally, in August, Hamburg-based asset manager Luxcara

scrapped a deal with Ming Yang to supply turbines for its

Germany North Sea wind farm.

To be sure, investor enthusiasm for the offshore wind sector,

once seen as the posterchild of the energy transition, has ebbed

in recent years due to rising costs and regulatory

uncertainties. President Trump's personal dislike of "windmills"

has further undermined the industry, which in the past year has

seen huge projects shelved from the U.S. East Coast to Britain,

Poland, Taiwan and South Korea.

The International Energy Agency recently revised lower its

forecast for growth in offshore wind over the next 5 years by

25% to 140 GW due to cost challenges and policy changes in the

United States.

But given Northern Europe's geography, wind remains one of

its best clean energy options. The continent is expected to add

43 GW of offshore wind capacity over the next five years, nearly

doubling its total installed capacity to 80 GW, according to

industry group WindEurope.

IT COMES WITH A COST

While China is the world's biggest deployer of offshore wind

technology, it does not dominate the industry as decisively as

the solar market. Chinese turbine manufacturers already face

strong competition from European rivals including Vestas and

Siemens Gamesa.

Chinese turbines costs can be 30% to 40% lower than their

European peers, according to consultancy Rystad Energy, but the

price advantage in Europe is likely inflated, as

European-supplied turbines benefit from lower transport costs

and premiums for insurance and financing.

And then there is the looming concern about cybersecurity

risks. Turbine manufacturers typically supply the software to

manage offshore wind farms and the connections with power grids.

With cybersecurity becoming a central strategic concern -

particularly with the rapid growth in artificial intelligence -

western governments may be increasingly wary of allowing Chinese

firms access to their most critical energy infrastructure.

DIVERSIFICATION

To reduce this dependency, European governments could put in

place policies and subsidies to encourage the further

development of domestic supply chains, particularly for complex

components such as turbines and software technologies.

But this will, of course, take time.

Additionally, western turbine manufacturers still need

access to rare earth metals and magnets. The production of which

is, once again, dominated by China.

That dependence could fade if western governments

successfully develop independent rare earth supply chains, but

again, that isn't going to happen overnight.

Wind power may ultimately help Europe develop affordable,

secure and clean energy, but China's current dominance of this

industry means Europe's path to this goal will be anything but

straightforward.

Want to receive my column in your inbox every Monday and

Thursday, along with additional energy insights and links to

trending stories? Sign up for my Power Up newsletter here.

Enjoying this column? Check out Reuters Open Interest (ROI),your

essential new source for global financial commentary. ROI

delivers thought-provoking, data-driven analysis. Markets are

moving faster than ever. ROI can help you keep up. Follow ROI

on LinkedIn and X.

(Ron Bousso, Editing by Louise Heavens)