February 25 (Renewables Now) - The outbreak of the COVID-19 disease, caused by a new strain of coronavirus, will have a moderate and mostly localised impact on China’s wind power industry, while effects on global supply chains are expected to be limited, according to a joint analysis prepared by the Global Wind Energy Council (GWEC) and the Chinese Wind Energy Association (CWEA).
After interviewing several leading Chinese original equipment manufacturers (OEMs), including a foreign turbine OEM, and wind industry stakeholders, GWEC Market Intelligence concluded that the epidemic will slow down operations, but it will not halve China’s installations in 2020 as some have predicted.
All major turbine OEMs, both Chinese and foreign, and component manufacturers have resumed production in the week beginning February 10, though not all facilities are yet operating at 100% capacity and most of the office work is done remotely from employees’ homes.
GWEC further explains the Chinese New Year festivities typically slow down operations in January and February and advises industry observers not to prematurely correlate the production decline with COVID-19 during these months, although the outbreak will for sure be a contributing factor.
The virus will delay projects in Central and Southern China, whereas cold weather typically does not permit foundation construction work across the northern regions during the first three months of the year regardless of the epidemic. According to the CWEA, more than 40% of new wind installations are located in North, Northeast and Northwest China.
Concerns are mostly limited to Central and Southern China, the centre of the outbreak, where many roads are still blocked and a 14-day quarantine is in place.
Quarantine requirements will impact the workforce availability for offshore wind projects, but logistical delays are unlikely due to proximity of turbine and component factories to coasts and harbours.
GWEC further says that China’s National Energy Administration (NEA) last week initiated an industry survey to evaluate whether to extend the feed-in-tariff (FiT) deadline for onshore wind projects, which is slated to expire on December 31, 2020. If the extension is approved, it will trigger an installation rush so the number of onshore wind projects that can capitalise on the FiT framework will not be revised.
Foreign turbine OEMs with factories in China will certainly feel the effects of the outbreak on production output and exporting activities through February and March. If the current challenges are not resolved beyond that period, foreign OEMs can turn their focus to countries such as India to meet demand.
China’s wind project pipeline will be delayed by roughly two to three months if the virus is brought more or less under control by mid-March, GWEC estimates. Any forecasts beyond March will be updated accordingly.