China Securities Co.,Ltd.: It is expected that the prosperity of European offshore wind equipment tendering will improve significantly next year, and the order elasticity of Chinese companies is expected to increase markedly.

China Securities Co.,Ltd. released a research report stating that after Europe's offshore wind experiences a trough in project FIDs in 2026, the prosperity of equipment tendering is expected to improve significantly in 2027. Europe's fixed-bottom offshore wind FID (Final Investment Decision) is expected to be approximately 2.6GW in 2026, while currently identified potential FID projects for 2027 total approximately 10.58GW, of which high-certainty projects account for approximately 5-6GW, and the UK's AR8 will further supplement the project pipeline. Since core equipment such as wind turbines, monopiles, and submarine cables is typically procured in advance before FID, UK AR7 and Irish projects are expected to enter a concentrated tendering window in 2026H2-2027. On the supply side, Europe's local monopile capacity begins to tighten at around 7GW of demand, and the production scheduling of core high-voltage submarine cable lines has already extended to 2028-2029. If Germany's approximately 16GW of existing projects receive relief and are restarted, European equipment demand is expected to break through the constraints of local effective capacity, further amplifying order opportunities for Chinese suppliers; if Germany continues to stall, then 2027 will more likely reflect order recovery rather than comprehensive supply-demand tightness. China Securities Co.,Ltd.'s main views are as follows: Judgments on Europe's offshore wind prosperity should place greater emphasis on "FID and equipment tendering" Compared with simply observing auction capacity, FID and the preceding equipment procurement progress better reflect actual order prosperity over the next 1-2 years, because offshore wind projects still need to go through multiple stages after auction, including permitting, grid connection, revenue mechanisms, supply chain locking, and financing, while core equipment such as monopiles, wind turbines, and submarine cables is typically tendered in advance before FID. It is expected that European offshore wind equipment tendering in 2027 will be significantly better than in 2026 Europe's offshore wind FID will remain at a low level in 2026, with a baseline estimate of approximately 2.6GW; currently identified potential FID projects for 2027 total approximately 10.58GW, of which high-certainty projects account for approximately 5-6GW, and the UK's AR8 will further supplement the project pipeline. At present, the wind turbine and foundation suppliers for most potential 2027 FID projects have not yet been finally locked in, meaning that the next 6-12 months will still be a concentrated tendering window for core equipment. The UK's AR7 fixed-bottom offshore wind awarded approximately 8.25GW, of which approximately 5.16GW of foundations have not yet publicly disclosed final awards. Compared with AR6, where a large number of old project orders were released in advance, the space for new equipment orders in 2027 is clearly larger. Whether Germany's existing projects can obtain relief is the core variable determining order elasticity in 2027-2028 From 2023 to 2025, Germany cumulatively awarded approximately 16GW of projects, but due to the previous zero-subsidy/dynamic bidding mechanism, cost, and financing pressures, a large number of projects have not yet reached FID. The WindSeeG reform has entered parliamentary review, and the new mechanism is conducive to improving the economics of future projects, but existing projects still lack a clear relief plan. If some projects are subsequently restarted through exit and re-auction, transitional mechanisms, or other means, this will further elevate the scale of equipment tendering in 2027-2028. Calculations show that Europe's local monopile capacity begins to tighten at around 7GW of demand. Once German projects restart, the order elasticity of Chinese companies is expected to be significantly amplified On the supply side, the bank calculates that Europe's local monopile capacity begins to tighten at around 7GW of demand, and some older production lines have XXL monopile specification limitations for large diameters; high-voltage submarine cable supply is even tighter, with production scheduling at some core manufacturers already extending to 2028-2029. Therefore, if only considering UK AR7/AR8 and Irish projects, European demand is already approaching the critical region of local capacity; if Germany's existing projects are further released, the order opportunities and capacity spillover space for Chinese monopile and submarine cable companies are both expected to increase significantly. Trade and localization risks are rising at the margin, but in the short term this is more likely to manifest as higher entry barriers rather than comprehensive restrictions. Current key focuses include NZIA implementation, the October European Council's related statements on industrial competitiveness and strategic dependencies, and anti-dumping risks targeting Chinese offshore engineering steel structures/monopiles. Risk warnings: 1. Policy progress such as European offshore wind auctions, CfDs, and Germany's WindSeeG may fall short of expectations, potentially affecting project development pace and the release of equipment demand. 2. FID, permitting, and equipment tendering progress for projects in the UK, Germany, Ireland, and other countries may be lower than expected, potentially delaying the realization of orders for monopiles, submarine cables, and other equipment in 2027-2029. 3. If Germany's existing project relief mechanism fails to materialize, short-term German offshore wind order elasticity may be weaker than expected. 4. EU localization, anti-dumping, anti-subsidy, and other trade measures may exceed expectations, potentially weakening the competitiveness of Chinese companies in the European market. 5. Europe's local monopile and submarine cable capacity may expand rapidly; if demand recovery falls short of expectations, this could intensify price competition and suppress order spillover. 6. Large fluctuations in steel, copper, freight rates, and exchange rates may adversely affect the profitability of relevant companies and the execution of overseas projects.