IN almost every area of the energy transition, one country dominates: China.
Wind power, where the People’s Republic still has less than half the global market, is a rare exception.
President Donald Trump is doing his best to change that.
The administration last month cancelled an Orsted A/S project off the coast of Rhode Island that’s 80% complete and large enough to power 350,000 homes.
It’s also working to stop a project off Maryland, roughly twice the size and due to begin construction next year.
A third development offshore from New York was halted for a month earlier this year before a deal was agreed to restart it.
On his first day in office, Trump banned all leasing of the US seabed for wind and excluded the technology from the government’s definition of “energy.”
The sector has taken this unnatural disaster remarkably well.
With the exception of Orsted, whose issues go far deeper than its battles with the Trump administration, shares in all the major players in Europe and the United States have risen since his election.
Nordex SE and Vestas Wind Systems A/S have gained 64% and 9.8%, respectively, while GE Vernova Inc and Siemens Energy AG have doubled – buoyed, in the latter two cases, by gas-turbine businesses more favoured in Washington.
That shouldn’t be too surprising. The engineering firms, utilities and turbine manufacturers that constitute the wind-power industry spread their revenues across numerous markets and have order books stretching years into the future.
Trump’s crusade against offshore wind in the United states – a relatively marginal market, even under President Joe Biden – isn’t sufficient to deal a direct killer blow.
It’s the indirect damage that’s more worrying. That’s because he’s striking at a time when Chinese companies, which for many years have struggled to compete outside their home market, are finally on the brink of breaking through.
By weakening the US and European wind industry at such a critical time, Trump may guarantee that developed economies lose their early lead in wind power as decisively as they did with solar energy, batteries and electric cars.
Engineering firms and manufacturers of costly equipment such as turbines and aircraft tend to run on slender margins and low debt.
You only get revenue if you can win competitive tenders against rivals, meaning you have little scope to fatten your profits.
A solid balance sheet and a wide array of projects help ride out uncertainty as clients change or cancel their developments, and convince future customers that you have the track record and cash flow to deliver.
That makes the sort of havoc being caused by Washington more insidious.
Wind power companies have mostly been able to reassure investors by pointing to their solid pipeline of future projects – but winning fresh bids is going to get harder as they have to conserve capital to defend themselves against fresh salvos from the White House.
High interest rates, threatened tariffs, inflation and a shrinking supply chain have already caused multiple tenders to collapse, with governments used to constantly falling costs unwilling to accept increased prices.
Germany last month joined Denmark and the United Kingdom in seeing an offshore wind auction attract no bids, and the Netherlands, Belgium and India have cancelled or put off tenders due to lackluster interest.
Mitsubishi Corp last week pulled out of three projects it had already won in Japan.
That offers an opportunity for China. — Bloomberg
David Fickling is a Bloomberg Opinion columnist covering climate change and energy. The views expressed here are the writer’s own
