Employees work on a wind turbine production line in Lianyungang, Jiangsu Province, China. … [+]
The head of gas and power company Siemens Energy says the renewable energy sector’s supply chain is so dependent on China that leaving China is almost impossible and the transition is in jeopardy. .
“Trying to build wind turbines without supply from China is next to impossible,” Siemens Energy CEO Christian Bruch said in a media and analyst briefing earlier this week. “The energy transition will not work.”
His comments highlight the complexity of companies desperately needing supplies and parts made in China, but not in competition with complete Chinese kits that hurt Western companies.
Bruch’s wind power unit, Siemens Gamesa, relies almost entirely on permanent magnets and rare earths from China to manufacture its wind turbines, with limited options for short-term diversification of its supply chain.
Market dynamics continue to drive global trade tensions with China. US President Joe Biden recently raised tariffs on Chinese-made electric vehicles, but the European Union is questioning whether Chinese wind turbine manufacturers are benefiting from subsidies that lower prices for Western manufacturers. An investigation has begun.
In Germany, where Siemens is based, the government and Chancellor Olaf Scholz are also calling on manufacturers to reduce their contacts with China. This stance has not been widely welcomed by major domestic industrial companies.
Siemens Energy’s CEO said it was important for Chinese wind turbine manufacturers to follow the same EU standards as the company and its European peers when selling wind turbines on the common market.
German Chancellor Olaf Scholz (right) and Siemens Energy President and CEO Christian Bruch. … [+]
Bruch further said that a harmonious international trade solution would be to find a middle ground between the severe protectionism that is emerging in the United States and free markets.
“I’m not in favor of blocking European markets, but I think we still need clear rules on how companies get their finances, where they get their guarantees from and what they pay for it. “This requires some consistency,” Bruch added, expressing hope that the EU investigation will ultimately achieve such an objective.
“What I would never want to do is advocate secession, risk aversion, etc. We have a beneficial link between the two regions, but it is inevitable.”
But Bruch’s position does not overshadow the problems facing his wind power unit. Siemens Gamesa is currently in the process of exiting several markets in Latin America and Africa, where it appears unable to compete with cheaper Chinese competitors.
Bruch said if price were the only differentiating factor, Siemens Gamesa would no longer compete in a market with multiple Chinese companies.
He also went so far as to say that the company had considered exiting the onshore wind business completely, but decided not to do so at this time because exiting would be more costly from a company’s perspective than staying. .
Instead, the company has chosen to launch an onshore wind turnaround plan that aims for double-digit growth within four to five years, failing which it will consider other options for Siemens Gamesa. Become.
