Chinese wind turbine maker builds European firewall from Beijing

One of China’s largest wind turbine manufacturers is seeking to address European national security concerns by placing data beyond the reach of Chinese law, after the UK blocked its turbines from British offshore wind farms.

Ming Yang Smart Energy said it had established separate European legal entities, with independent governance and IT systems, to help convince governments and customers that its equipment cannot be used by Beijing to gather sensitive information or even disrupt electricity supplies.

The Chinese company has followed legal advice from law firm DLA Piper to set up structures that will help insulate its European customers from the reach of China’s National Intelligence Law, which requires companies to co-operate with state intelligence agencies.

The move follows a statement by the UK government in March that it would not support the use of Ming Yang turbines in British offshore wind farms after conducting a national security assessment. The decision halted the Chinese company’s plans for a £1.5bn factory in Scotland that would have created up to 1,500 jobs.

“The decision by the UK has been a push for us to work even harder on the topics that are on the table, the topics and allegations around cyber security, data security and all these accusations that everyone is aware of,” Philipp Pfefferle, Ming Yang’s head of public affairs, told the FT. “It’s important for us to convince the market there are answers,” he said.

Ming Yang’s response includes forming a joint venture with Octopus Energy, providing turbines with the UK energy retailer providing software and control systems. “We’re exploring together how we can develop onshore turbines tailored for the UK market,” they said.

Pfefferle did not comment on the joint venture’s timing or ownership structure, but said the goal was to establish a company “compliant with cyber security and data protection” regulations in Europe.

EU governments are facing a dilemma as they try to balance the development of renewable energy with the security challenges of using Chinese equipment that could potentially be monitored or controlled remotely. Chinese wind turbines are typically 30 per cent to 40 per cent cheaper than western equivalents, according to the consultancy Rystad.

“Politically we have a very problematic situation where Chinese companies are bound by Chinese law and legislation to transfer data when called upon to do so,” said Michal Meidan, head of China Energy Research at the Oxford Institute for Energy Studies.

While it is extremely unlikely that a Chinese company would take such a drastic step as to cut off a foreign country’s wind farm, “there’s the implicit threat of it”, she added.

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Ming Yang is trying to address those fears by separating its European operations from its Chinese parent. Pfefferle said: “We do not even as Ming Yang Europe have direct access to the wind turbines — it all goes via the developer. There is no access from China into our European organisation or into the data of the wind farms that people are afraid of.”

However, simply establishing separate businesses in Europe was “not the full solution”, Pfefferle said, adding that the European company had to be able to show “separate governance” from its Chinese parent.

Other Chinese groups have also taken similar steps to firewall their foreign operations away from Beijing. The most high-profile example is social media app TikTok, which formed UK and Irish legal entities with local responsibility for European users.