Highlights
- Research identifies five key risks associated with Chinese ownership and supply chain dependence in Sweden’s wind energy sector.
- Chinese state-owned companies control 10.4% of Sweden’s installed wind power capacity.
- Supply chain dependence on China is high.
- EU initiatives like de-risking aim to balance benefits and risks of China’s role in the wind energy sector.
- Economic security strategies are part of EU efforts to manage the impact of Chinese involvement in the wind energy sector.
China’s dominant role and ambitions in green technology have sparked concerns about current and future economic and political vulnerabilities in Europe. A recent report on the topic investigates vulnerabilities and risks linked to a Chinese presence in Sweden’s wind energy sector. The authors map Chinese ownership of wind farms, the use of Chinese-made turbines, and dependence on Chinese supply chains. The authors, based on the underlying investigation, identify specific risks, drawing on previous research and expert interviews.
The author, Henrik Wachtmeister (opens in a new tab), is a Senior Lecturer/Associate Professor at Department of Earth Sciences; Natural Resources and Sustainable Development (opens in a new tab), Uppsala University in Sweden. The report finds that Chinese state-owned companies control 10.4 percent of Sweden’s installed wind power capacity, which corresponds to 3.4 percent of total electricity production.
Although Chinese-made turbines make up less than 1% of installed capacity, the dependence of non-Chinese turbine manufacturers on Chinese supply chains is found to be high. Also, China makes up about 70-80% of key inputs globally, dominating almost 100% of the refining of key rare earths. What are the five key risks this research identifies with Chinese ownership of wind-generating power? And supply chain dependence: potential electricity supply cuts and market manipulation, information transfer, export restrictions, IT sabotage, and indirect economic and political influence.
The report identifies five key specific risks associated with Chinese ownership.
While Chinese ownership has garnered the most attention in Sweden, the risks associated with this are assessed as relatively low at current levels. The risk of electricity supply cuts and price manipulation is deemed low due to the limited market impact, and high costs such actions would incur for Chinese interests.
Wachtmeister points out that both in the short and long term, the most risk centers on dependence on Chinese supply chains. While the Swede deems the overall situation low risk, over time, this dependency could be used to limit the availability of spare parts or components for new turbines and could be employed across a continuum, ranging from subtly skewing competition to complete export bans targeted at individual countries or Europe as a whole.
Also, Swedish dependence on China’s supply chain and long-term European wind industry competitiveness both appear linked to the broader overarching and long-term risk of Chinese economic dominance
From one lens the Chinese ownership of this class of energy in Sweden is low risk. For example, when viewed in isolation, Chinese leadership and ownership in wind technology, and manufacturing is likely manageable.
Yet when considered an incremental sector dominated, Chinese ownership takes on more risky elements. As it contributes to the overarching strategic threat to Sweden’s and Europe’s long-term economic prosperity and political autonomy.
What are policymakers, business leaders, and government representatives to do? “Policymakers need to strike a balance between the benefits of China’s role in the wind energy sector and the risks it poses, both in the short and long term.” And numerous efforts are under way within the European Union to this end, such as the de-risking initiative and economic security strategy, plus more specified measures like the Net-Zero Industry Act, the Raw Materials Act, and the Foreign Direct Investment Regulation.
Daniel
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