- Solar and storage expected to see around 20% coronavirus impact compared to base case.
- Onshore wind impact is more muted in near-term, but cascading supply chain and construction risk present further downside risk.
- Customer driven DG solar, storage and EV purchases faced outsized impact as a result of economic shock.
The Wood Mackenzie Energy Transition Practice team will be writing a weekly update on the coronavirus and its impact on the global power and renewables industry.
Wind: Rolling containment measures have depleted the supply chain’s ability to shift capacity to maintain output, reducing 2020 global production capacity by 15-20%.
- Blades represent a particularly challenged sourcing component, as both key manufacturing and raw materials markets are currently under restrictions.
- Production capacity at re-opened plants may have trouble reaching pre-crisis levels as a result of social distancing and protective equipment requirement.
Offshore Wind: Downside risk is minimal as China restarts, US projects are still too immature and Europe was already set for slowdown in installations and contracting. Emerging offshore markets and earlier stage projects could face delays in financial close as a result of economic instability and currency risks.
Solar: 2020 solar installations have been revised down by 17% from pre-coronavirus levels from 130.5 GW to 108.0 GW. In the absence of prolonged recession or profound changes to financing and utility procurement, 2021 will recover to be 3% below pre-coronavirus expected levels. While the utility-scale impact will primarily see timelines shift, residential and C&I installations will struggle as customers come under significant economic pressure even past the lockdown.
- Module prices in Europe and the US are starting to decline as demand impacts materialise, with the US seeing its first price decline in the first week of April.
Storage: Coronavirus could lower 2020 installations by 20% compared to our 2020 base case, with the risk stemming largely from project execution delays. Positive growth over 2019 is expected in both scenarios, as well as a return to pre-coronavirus impact levels in 2021. Like solar, the distributed storage risk is more acute.
Grid Edge: Coronavirus mitigation measures are a test for grid edge technologies supporting improved diagnostics and remote operations and could catalyse further investments. Long utility sales cycle times are expected to mitigate the negative impacts of coronavirus on investment plans.
Electric Vehicles: EV sales are expected to drop 43% year-on-year for 2020. China and the EU are expected to recover to 2019 levels. In China, 32 of VW’s 33 facilities and all 2,000 dealerships are back online as operations resume. In the US, the auto union (UAW) is reporting 19 deaths over more than a dozen facilities.
Author: GBA News Desk
Source: Woodmac
