While analysts and international agencies are already assessing the fallout from the coronavirus outbreak on global oil demand, the damage to the energy industry is extending well beyond oil. Promising fast-growing green energy technologies and sectors are also suffering because the outbreak is disrupting China’s industrial activity and manufacturing of crucial components for the solar, wind, and battery storage industries.
Much like China’s oil demand slump impacts the global market, the Chinese slowdown in manufacturing of renewable energy components has a ripple effect throughout the global supply chain of major renewable energy industries.
The current situation highlights China’s increased importance in the global energy markets over the past two decades since the SARS outbreak – from oil to battery storage, all energy sectors suffer when Chinese manufacturing and demand hits the brakes.
In the solar industry, factory shutdowns and production disruptions across China have delayed exports of solar panels and other components, disrupting the supply chain of the solar power industries and affecting solar projects in Asia and Australia. The disruption of the solar supply chain could become costly for as much as US$2.24 billion worth of solar projects across India, which relies on China for 80 percent of the solar modules it uses, CRISIL Ratings, an S&P Global company, said earlier this week. A total of 3 gigawatts (GW) of solar project across India risk incurring time and cost overruns, including penalties for missing commercial operation timelines, CRISIL noted.
“If the production interruption in mainland China lasts longer than one month, factories in south-east Asia and the US will start to see supply shortages that will reduce their production output,” Xiaojing Sun, an Wood Mackenzie senior analyst in the energy transition research team, said last week, as carried by Renews.
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