Sinolink: Mechanism repair and auction boom run in parallel; European offshore wind orders are expected to reach an inflection point for volume growth.

Sinolink: Mechanism repair and auction boom run in parallel; European offshore wind orders are expected to reach an inflection point for volume growth. Sinolink released a research report stating that in the first half of the year, European offshore wind supply chain orders came under phased pressure, but large-scale project reserves, Germany's auction mechanism reform, and positive changes such as France's AO10 are increasing the visibility of future order recovery. The bank highlights Dajin Heavy Industry (002487.SZ), which has a European project delivery track record, ultra-large foundation manufacturing capabilities, localized collaboration capabilities, and stable performance in fulfilling contracts. Sinolink's main views are as follows: Germany's concentrated stock of projects is the main variable behind the short-term weakness in orders Projects in Germany that have completed auctions but not yet reached FID total about 16.5GW, accounting for about 38% of comparable stock projects in Europe. Negative-subsidy auctions, wake losses, and grid connection delays have jointly weakened the economics of some projects, causing developers to temporarily slow procurement of core supply chain items such as foundations and wind turbines. However, under the constraints of relatively high deposits and performance milestones, the cost for developers to directly exit projects is also relatively high, and they are more likely to advance projects through policy consultation, project optimization, and phased procurement. Auction mechanisms are shifting from pursuing low prices to balancing revenue stability and project deliverability Germany plans to introduce a two-stage mechanism combining market-based bidding with contracts for difference, and to increase project performance deposits. While ensuring successful project auctions, this also raises the speculative cost for owners participating, thereby ensuring certainty of project delivery. At the same time, for existing offshore wind projects, the German government has also promised to replan sites to reduce wake risks for existing awarded projects. France's AO10, meanwhile, raised the scoring weight for contract and financing soundness from 12% to 18%, while introducing K and L price adjustment coefficients before and after commissioning to reduce the risk of cost mismatches during the development and operation stages. As the policy focus shifts from "whether awards can be completed at the lowest price" to "whether winning projects have the ability to secure financing, procure, and deliver on schedule," confidence in medium- to long-term project delivery is expected to continue rising. The supply chain sourcing rules of France's AO10 reflect strong pragmatism. AO10 does not set a simple, rigid local French manufacturing ratio, but instead requires that at least 5 of 9 categories of strategic components, including wind turbines and foundations, not come from dominant third countries as recognized by the EU; the component sourcing score weight is only 6 points, and full marks can be obtained by meeting 8 categories. This mechanism both promotes the development of key European supply chain capabilities and preserves room for international suppliers with stable delivery, origin management, and European localization collaboration capabilities to participate. Auction scale in 2026-2027 remains at a historical high, and the medium-term project pipeline has not shrunk The bank estimates that within two years, European offshore wind projects planned for award will total about 39.4GW, of which about 30.7GW have already completed awards or entered formal auction procedures. France's AO10 plans to auction about 9.7-11.1GW of offshore wind capacity in a single round, which, based on the proposed awarded capacity in a single round, would be the largest offshore wind auction in European history. Large-scale auctions will provide a project pipeline for installations and supply chain orders after 2030, but from auction to order still requires processes such as permitting, financing, and FID. Going forward, the focus should be on project conversion efficiency rather than merely nominal auction capacity. Energy security continues to form the underlying support for the medium- to long-term development of European offshore wind, and the bank is bullish on the gradual release of supply chain order demand Rising natural gas prices once again highlight Europe's dependence on imported fossil fuels. As a renewable energy source with favorable resource endowments in Europe, a well-developed local supply chain, and alignment with European ideology, offshore wind is bound to become the most important choice for Europe's energy infrastructure. As auction mechanisms gradually repair, project bankability improves, and new auctions continue to land, the European offshore wind industry is expected to gradually shift from "growth in the number of projects" to "growth in deliverable projects," and supply chain orders are also expected to gradually ramp up in the coming quarters. Risk warning Offshore wind project construction progress may fall short of expectations, and there are trade policy risks.