The renewable energy sector’s heavy reliance on China for supplies and parts is posing a significant challenge to the transition to clean energy. The CEO of Siemens Energy, Christian Bruch, emphasized that breaking away from this dependency is next to impossible, making the energy transition jeopardized without Chinese support. This reliance on China has led to global trade tensions, with the U.S. raising tariffs on Chinese electric vehicles and the E.U. investigating whether Chinese wind turbine makers are benefitting from subsidies to undercut Western manufacturers.
Siemens Energy’s wind unit, Siemens Gamesa, heavily relies on permanent magnets and rare earths from China for manufacturing wind turbines. The limited options for diversification of the supply chain pose a significant challenge for the company. However, the CEO stressed the need for Chinese wind turbine manufacturers to be held to the same standards as European companies when selling their turbines in the common market. Despite the challenges, Bruch expressed hope that a middle ground between protectionism and a free market could be achieved in international trade.
Amidst the challenges faced by Siemens Gamesa, the company is considering options to address competition from cheap Chinese competitors. The company is in the process of retreating from markets in Latin America and Africa where it struggles to compete with Chinese players. Bruch mentioned that the company had even contemplated exiting the onshore wind segment altogether, but decided against it due to the higher costs associated with such a move. Instead, Siemens Gamesa has launched a turnaround plan to target double-digit growth within the next 4 to 5 years.
The CEO emphasized the importance of clear rules in international trade to ensure fairness between companies in different regions. While he did not advocate for blocking the European market, he stressed the need for consistency in terms of how companies are financed and operate. Bruch’s stance reflects the complexities and challenges faced by companies in the renewable energy sector due to their reliance on Chinese supplies. Despite the difficulties, Siemens Energy remains committed to finding solutions to navigate the evolving global trade landscape.
Bruch’s comments shed light on the delicate balance that companies like Siemens Gamesa must strike between competition from Chinese manufacturers and maintaining market share in various regions. The challenges posed by the current supply chain dynamics highlight the need for strategic planning and potentially reevaluating business strategies in the renewable energy sector. The CEO’s cautious approach towards potential solutions underscores the complexities involved in transitioning to a more sustainable and competitive renewable energy market. As global trade tensions continue to rise, finding a balance between competition, regulation, and collaboration will be crucial for the future of the renewable energy sector.
