The coronavirus is hitting renewable energy supply chains and factories, and could slow the global energy transition

Source: By Anmar Frangoul, CNBC • Posted: Tuesday, April 7, 2020

Global renewable energy capacity hit 2,537 gigawatts (GW) at the end of last year, an increase of 176 GW compared to 2018, but the coronavirus continues to cast a shadow over the sector’s prospects for 2020, impacting both supply chains and manufacturing facilities.

According to figures from the International Renewable Energy Agency’s (IRENA) “Renewable Capacity Statistics 2020” report, new additions last year were slightly lower than the revised total of 179 GW added in 2018.

Looking at the bigger picture, however, the organization said Monday that renewables “accounted for 72 per cent of all power expansion” in 2019, with solar and wind growing by 98 GW and almost 60 GW respectively. Together, these two technologies were responsible for 90% of renewable additions in 2019.

In terms of other sources, hydropower growth was described as being “unusually low” last year. In a foreword to the report, IRENA’s Director-General Francesco La Camera explained that a number of large projects had “missed expected completion deadlines.”

Breaking things down geographically, the report shows that Asia was responsible for 54% of renewable capacity additions last year.

While the additions reported by IRENA may appear promising overall, this year looks set to pose a number of challenges for the renewables sector, many of them connected to the COVID-19 pandemic, which has caused issues with supply chains and forced some factories to shut.

There are also fears that the pandemic could negatively affect investments in clean energy, while the steep drop in oil prices is another factor that could potentially make renewables less attractive to some markets.

IRENA’s La Camera acknowledged the impact that the coronavirus pandemic would have going forward.

“As an existential threat, the multi-faceted fallout from coronavirus … now sits alongside climate change as a defining challenge of our time,” he wrote.

Challenges ahead

On Monday, Wood Mackenzie projected that 3 GW of solar photovoltaic and wind installations in India could be delayed due to the lockdown currently in place there.

“The timing of the lockdown is unfortunate as Q1 (the first quarter) is typically one of the busiest periods for wind project installations,” Robert Liew, a principal analyst at the research and consultancy firm, said in a statement.

“The lockdown will delay some projects until summer, and if the lockdown is extended past April, wind farm construction could be further delayed into the monsoon season, where wind installations are typically at their lowest,” he added.

Wood Mackenzie added that solar photovoltaic installations in India were “expected to be hit hard” because the sector was “heavily dependent” on Chinese photovoltaic module imports, which had experienced disruption because of the virus.

Globally, the wind industry is undoubtedly facing challenges. Toward the end of March, the Global Wind Energy Council said its forecast of continued growth across the next five years — more than 355 GW of additions — would “undoubtedly be impacted by the ongoing COVID-19 pandemic, due to disruptions to global supply chains and project execution in 2020.”

It was, however, “too soon to predict the extent” of the coronavirus’ impact on both energy markets and the wider global economy, the GWEC added.

On a regional level, the impact of the pandemic has already had an impact. According to industry body WindEurope, while “the majority” of wind turbine and component factories in Europe are continuing to operate, 18 manufacturing sites are currently closed. All these facilities are in Spain or Italy, which have been hit particularly hard by the pandemic.

A number of other factories, WindEurope says, “have temporarily paused activity as a precautionary step to strengthen sanitary measures within the sites and guarantee full compliance with government recommendations.”

Europe’s supply chain also “experienced some disruptions” in February related to components and materials coming from China. According to WindEurope, supplies are now “ramping back up again.”