WIND

MingYang misses out in Norway — but Chinese question remains

MingYang Smart Energy missed the shortlist for Norway’s 1.5GW Sørlige Nordsjø offshore wind tender. This will save the Norwegian government tricky questions about competition and security, but concerns about the influence of Chinese firms in Europe aren’t going away.

RICHARD HEAP

February 19, 2024

  • Norway pre-qualified five bidders an offshore tender in March
  • MingYang and Hydroelectric Corporation missed the shortlist
  • European wind firms have warned of rising Chinese influence

 

On Friday, Norway’s government named five pre-qualified bidders in its 1.5GW Sørlige Nordsjø II offshore wind tender. But the results are as noteworthy for two companies who didn’t make the cut as the five successful bidders.

These groups are set to take part in the auction on 18th March:

  1. A consortium of Aker Offshore Wind, BP and Statkraft
  2. A tie-up between Equinor and RWE
  3. The Norseman Wind group, including EnBW
  4. A partnership between Shell, Lyse and Eviny
  5. The Ventyr consortium of Parkwind and Ingka

 

The auction itself will be an interesting test for the market given that Norway is looking to pick a winner based solely on price. The winner will sign a two-way Contract for Difference similar to those used in the UK, and the results will show us how increased focus on project viability by developers affects bid levels.

But there are also two names missing compared to the seven-strong shortlist of firms that applied, which was revealed last November. They are Texas-based utility Hydroelectric Corporation and Chinese turbine maker MingYang Smart Energy.

Both omissions give us an insight into the global offshore wind market.

First, Hydroelectric Corporation. This was always a surprise addition to the list of seven because we are not aware that the company has any pedigree in the offshore wind sector, although it has set a goal to use intermittent power from offshore wind farms to complement production from hydroelectric plants. With that aim, we can see why Norway and its strong hydro market appealed.

We have also not seen US utilities play a meaningful role in Europe’s offshore wind market, and US utilities that have been active in offshore wind globally have tended to be the local offshoot of a European firm, such as Iberdrola’s Avangrid. But it will certainly be worth watching to see what the company does next.

And second, MingYang Smart Energy. There has been no comment so far from MingYang or Norway about why the firm wasn’t on the final list. But it is worth reflecting on some of the talking points surrounding MingYang in this process, as the growing influence of Chinese firms in European wind has led to concerns about national security and cheap imports.

In November, Norwegian oil and energy minister Terja Aasland said national security would be high on its agenda in its offshore wind tenders, but he also said the government would not prematurely rule out any bidders on this basis. His warnings prompted MingYang to highlight it is not state-funded and would also offer protections for the data produced by its turbines.

We may never know if the reason MingYang isn’t isn’t in the final five comes from Norway or the company itself. But the fact it isn’t will save the Norwegian government from tough questions on security and turbine market competition if it was to win the auction.

Incidentally, it is not far-fetched to suggest that MingYang itself decided to pull out. Oil giant Shell has warned it could refuse to make a bid in the final process because, according to Shell Norway country manager Marianne Olsnes at an event in Oslo last week, the tender conditions were “challenging” and the business case for developing in the area was “not looking great”.

This would further weaken competition in a tender where Norway has already fallen short of the between six and eight pre-qualified bidders it wanted. On that count alone there should be space for MingYang. But fewer bidders may help bids stay viable.

 

Tough questions

Yet while MingYang’s absence may save Norway’s leaders from embarrassment, the questions about how reliant western countries should be on China for their energy transitions remain.

For example, in the Financial Times last week, Longi Green Energy Technology warned that western countries would slow down their green transitions if they move away from Chinese suppliers. The company’s vice president Dennis She was talking mainly about tariffs on solar panel imports, where Longi supplies around 20% of solar panels used globally and Chinese firms supply a combined 80%.

He said that restricting imports of Chinese-made solar panels would double their costs globally and make it less viable to roll them out at scale. This would have a knock-on effect on jobs and the investment in new projects — and the lessons apply in wind too.

The dynamics aren’t exactly the same in wind, where Chinese turbine makers don’t enjoy the same global dominance as their counterparts in solar. But we may yet see this change because Chinese turbine makers have rapidly grown their production capacity for the local market and may need to find customers globally to support that if domestic demand slows.

We believe it is only be a matter of time before MingYang wins a major deal in the European offshore wind market. It has already been making headway. MingYang formed a partnership with Opergy in June 2023 to support its growth in UK offshore wind; announced plans for a 22MW offshore turbine model in November 2023, which could help drive down costs; and has gained a foothold by winning small offshore turbine contracts in the UK and Italy.

Irrespective of the Sørlige Nordsjø II shortlist, European’s wind Chinese conundrum isn’t going away.