BNEF says the spread of the coronavirus (Covid-19) has plunged the onshore wind industry into unprecedented uncertainty, but offshore wind projects are faring better
“Supply-chain disruption and labour shortages are putting what promised to be a record year into jeopardy and have caused us to slash our 2020 onshore wind forecast,” said BNEF.
“So far, the impact is greatest in busy markets in Europe and the US, where delays put even more strains on tight construction schedules. We predict much of this capacity will roll over into 2021, meaning global installations surpass 70 GW for the first time.
“In countries hit hardest by the virus, we assume a two- to three-month project execution delay. After this, we assume countries individually return to a more normal situation, as suppression measures are gradually relaxed (though some targeted measures and travel restrictions remain in place).”
BNEF said its offshore forecast remains unchanged. “Unlike in onshore wind, installations were already expected to be low in 2020. Most of this year’s capacity will come online in China, where construction schedules are largely unaffected, while many European projects are already at a late stage of construction,” BNEF said. “Most developers remain adamant that construction schedules are on track, for now.”
“For most developers, project holdups will delay revenue but are manageable,” BNEF said, “but unfortunately, a timing crisis is developing in some markets, especially the world’s two largest wind markets – China and the US – where delayed projects are at risk of missing 2020 subsidy deadlines.”
However, BNEF believes there are already signs officials in some countries may be lenient. Germany’s federal network agency has announced that projects successful in previous auctions will be granted an extension to commissioning deadlines. US developers are lobbying hard to secure an extension to the full production tax credit. In China, there are calls for a three-month extension to the end of year deadline, but the recently published 2020 wind policy did not grant an extension.
Companies are also facing the difficult task of trying to keep turbines running while looking after their employees. Electricity generators are usually exempt from even the strictest countrywide lockdowns, but health and safety regulations often require technicians to work in pairs or groups on-site, making social distancing impossible.
In Europe, the vast majority of scheduled maintenance happens in summer, when wind speeds are lower. Facing a shortage of turbine technicians, operators are trying to calculate the health of each asset to work out how much longer each can run before risking serious damage. In some cases, disregarding maintenance schedules can void turbine warranty, leaving no choice but to switch off.
BNEF’s guidance echoes that of other analysts, including Wood Mackenzie, which has forecast a steep decline in the addition of onshore wind capacity in 2020, but said the offshore wind downside risk ‘is minimal’ as China restarts. Many US offshore wind projects are at too early a stage to have been affected yet and Europe was expecting a slowdown in installations and contracting before a steep increase in activity in subsequent years, Wood Mackenzie said.
There have been some significant developments in the offshore wind sector in Europe, however, with Vattenfall confirming it will not bid for the Hollandse Kust Noord offshore wind tender in the Netherlands.
However, the Dutch Government has confirmed that it does not expect that the Covid-19 pandemic will affect the tenders and it expects submission of bids for the zero-subsidy project to go ahead as planned. The auction closes on 30 April 2020.