Production delays as a result of the coronavirus outbreak could cause a 10-50% decrease in wind turbine installations in China in 2020
Energy analyst Wood Mackenzie said the COVID-19 outbreak has brought much of China’s wind turbine component production to a standstill in recent weeks.
Although there is limited production capacity in Hubei province, the quarantine and travel restriction measures will impact an already tight supply situation for key components. This is bad news for key wind markets such as China and the US where developers are rushing to complete projects by end of the year to remain eligible for government subsidies.
Wood Mackenzie senior consultant Xiaoyang Li said, “Due to an already tight supply of key components such as turbine blades and main bearings before the COVID-19 outbreak, first-quarter production delays have already reduced annual output of those components by about 10%.
“Components without pre-existing bottlenecks, such as generators and converters, should be able to recover from Q1 delays if the outbreak is brought under control in the next few months.
“In a best-case scenario, the epidemic is contained and production resumes by the end of March. In the worst, the epidemic could continue to impact the supply chain well into the middle of the year.
“Based on these two possibilities, we estimate production delays across the wind turbine supply chain will result in a 10-50% decrease in 2020 wind installations in China, compared to our Q4 2019 wind power outlook, which was at 28 GW capacity.”
For non-China, Asia Pacific markets, the direct impact of COVID-19 is minimal based on the limited number of reported cases and extreme containment measures taken to limit the spread of the virus. Wood Mackenzie said these wind markets will need to lean on their domestic supply chains or imports from other low-cost regions such as India, Vietnam and southern Europe.
The greatest concern for markets outside of China lies in the US, which is already struggling with a myriad of supply bottlenecks. 6 GW of installations targeting 2020 commercial operation were identified as at-risk before the outbreak, requiring Internal Revenue Service exemptions to maintain access to 100% value of the production tax credit. This number is now likely to grow.