Feedback From Expert Call_ The Entry Of Chinese Wind OEMs into Europe

Summary of Jefferies Equity Research Call on Clean Technology Industry Overview - The focus of the call was on the European wind sector, particularly the potential entry of Chinese wind Original Equipment Manufacturers (OEMs) into the market [2][5]. Key Points and Arguments Market Context and Challenges - The European wind sector has been historically dominated by Western suppliers, creating significant challenges for Chinese turbine manufacturers [2][2]. - Chinese suppliers have struggled to penetrate the market due to banks' reluctance to finance projects involving Chinese turbines, leading to a dilemma for developers between cheaper Chinese options and more expensive European alternatives with easier financing [2][2]. - This trend is particularly pronounced in offshore wind, where project finance and non-recourse debt are crucial for maximizing returns [2][2]. Evolving Perspectives on Chinese Turbines - There is a shift in perception regarding Chinese turbines in Europe, with a gradual change expected mainly in offshore wind [2][2]. - Factors contributing to this shift include bottlenecks faced by Western suppliers due to increased demand for GW-scale wind farms, resulting in longer lead times for turbine delivery (at least 5 years) [2][2]. - Developers are increasingly considering Chinese turbines as viable options, especially in the floating offshore wind sector, where Western suppliers have been hesitant to invest [2][2]. Adaptation of Chinese Suppliers - Chinese turbine manufacturers are evolving beyond competing solely on price and are becoming more educated about the European market's requirements [2][2]. - Many Chinese suppliers are exploring partnerships for local manufacturing in Europe to alleviate concerns regarding technology safety and supply chain reliability [2][2]. - This shift has led to discussions about presenting Chinese turbines as serious contenders in the market, particularly as Western suppliers focus on established projects [2][2]. Banking and Financing Dynamics - The banking landscape is beginning to adapt to the possibility of financing projects with Chinese turbines [2][2]. - While many banks remain cautious, about 5 out of 10 banks are open to exploring financing options on a case-by-case basis, provided there are adequate risk mitigation measures [2][2]. - Banks are particularly concerned about the supply chain and availability of spare parts for Chinese turbines over the long term [2][2]. - There is a gradual acceptance of Chinese technology, although political and market dynamics will continue to influence the pace of this shift [2][2]. Other Important Considerations - Developers are now more inclined to consider Chinese turbines, especially in offshore wind projects, as they seek to balance cost and financing considerations in an evolving energy landscape [2][2].