- Accelerating the scope and scale of coronavirus containment risks near-term project execution, while longer term fundamentals rest on a demand rebound.
Technology value chains have varying levels of exposure to supply side constraints and potential scale of demand erosion.
- Asian dominant supply chains for solar and energy storage are in the process of rebounding after contractions in February. Moving forward, near-term development activity and local logistics in leading European and North American markets are expected to outweigh lingering supply issues.
- The wind industry’s supply chains are much closer to market in Europe and North America and will be impacted as production and logistics are curtailed. US projects remain under the added pressure of qualifying for the production tax credit, however restrictions in many US wind regions remain limited compared to Europe at the current moment.
- Electric vehicles (EVs) remain particularly exposed due to a nascent supply chain and being largely a premium consumer purchase. The outsized decline in EV sales compared to ICE in China January and February highlight this impact. Long-term fundamentals remain strong but gigafactory facilities are likely to be delayed and fledging EV manufacturers could face bankruptcy. Declines in EV sector demand may be gains for the stationary storage segment but the situation remains fluid.
Carbon emissions in 2020 will drop as a result of national responses, while the longer-term fundamentals of the energy transition remain in place.
Author: GBA News Desk
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. The update is republished with permission. The update covers: wind, solar, energy storage, electric vehicles, European power, North American power, Latin American power and Asian power.