Failure to cut overreliance for critical technologies might be worse than that with Russia in gas, warns Nordex CEO

By Nuran Erkul

BRUSSELS (AA) - A growing number of countries and companies in Europe are increasing their efforts to cut overreliance on a single source, which emerges as China, for the supply of clean energy technologies by drawing lessons from the experience European countries had with Russia in natural gas supply in the last almost two years.

The situation might be even worse than that with Russia in gas if the industry fails to reduce reliance on a single source for critical technologies for society, electricity and national security, Jose Luis Blanco, CEO of Nordex Group, told Anadolu in an exclusive interview.

Cautioning that a failure to cut high dependency will be a very big strategic mistake from the policymakers, he said a resilient supply chain could contribute both to a resilient electricity system and economy.

"EU wants a resilient supply chain and economy. You cannot have a resilient economy if your electricity system is not resilient and you are not going to have a resilient electricity system if you do not have a resilient supply chain that is profitable, that can operate, work and support the economy," Blanco said.

Supply chains for clean energy technologies and critical minerals are highly geographically concentrated, according to the International Energy Agency's (IEA) flagship report, World Energy Outlook 2023, which warns that diversified investment to meet growing demand can help, but the international partnership will also be necessary.

The world is estimated to rely on %79 of China for the supply of solar PV by 2030, while %64 and %68 for wind and batteries. This dependency on China could be %54 for the supply of lithium chemicals, %26 for electrolyzers and %72 for refined cobalt.

"Russia cut gas, but you (Europe) have supply from other locations. The price is high, and families and economies are suffering, but you have the security of supply. Thus, national security and electricity system cannot depend on a single source," Blanco warned.

- Concrete measures needed to secure supply chain and energy independence

He raised hopes that the European Wind Power Action Plan announced by the European Commission, considered strategic, could contribute concrete measures to secure supply chain and energy independence.

The EU aims that the plan will help to maintain a healthy and competitive wind energy supply chain by securing a pipeline of projects attracting the necessary financing and competing on a level playing field globally.
The plan includes immediate actions to accelerate the deployment and permitting processes and improved auction design, which are hurdles that the industry is currently facing, according to Blanco.

"Despite being in the middle of an energy crisis and very high gas prices, permitting is slow in renewables. The governments and municipalities are not fast enough in permitting processes. Europe, including Türkiye, is facing inflation, which hurts the industry. But, auctions are not indexed with inflation. Companies face issues that the price may or may not be viable," he said.

"On the other side, China has no inflation and this accelerates the trend to even do more in China."

Blanco said, thus, the steps are moving in the right direction for improving supply chain and industry conditions. Now, these need to be translated into specific measures and legislation.

- "Türkiye emerges as one of biggest supply chain hubs"

Türkiye is an essential supply chain hub for the wind industry in Europe, according to Jose Luis Blanco.

"Türkiye's supply chain competitiveness and ecosystem is a reality. I think Europe needs to increase its interdependency with Türkiye. The more we move towards as close as possible to a common market, the better for us, both as an industry and a company," he said.

In that regard, Nordex procures €600 million of wind energy equipment from Türkiye every year and the vast majority of that is for western, central and northern Europe, Blanco noted.

"Türkiye is the biggest source and supplier for our steel towers worldwide and we plan to increase the procurement and manufacturing of Turkish goods. This increase could be a double-digit growth," he said.

The German giant's total wind equipment and product procurement from Türkiye could reach €1 billion in 2024.

Ender Ozatay, vice president at Nordex Group Türkiye and Middle East, said that the procurement growth is over 50% for 2024.

"We are the market leader in Türkiye by installing about 3.2 gigawatts. We have six lines for blade manufacturing and are now adding two more lines. The new lines will help us meet our growing needs in 2024 and 2025," he added.

The Turkish wind equipment industry is the fifth biggest in Europe, employing over 25,000 people. The industry exports about %80 of its production.