BloombergNEF (BNEF) believes there is a “considerable downside risk” to an earlier forecast of 75.4W global installations in 2020, with the impacts of COVID-19 likely to be most keenly felt in onshore wind and in China and the US.
The analysts have not finalised their latest global forecast, but believe installation figures in 2020 should still be higher than the current record of 62.8GW added in 2015.
There will be only a minimal impact on offshore wind installations in 2020, as most additions are due in Europe, where there are likely to be fewer logistical bottlenecks due to the virus, they believe.
How quickly Chinese suppliers ramp-up to full production as staff slowly return, and the severity of delays to already-tight construction timelines from late component deliveries in the US will be the largest factors in hindering installation levels, the analysts stated.
Both countries face end-of-the-year subsidy deadlines, and developers rushing to complete projects in order to claim support has squeezed supply chains and construction schedules.
China
The Global Wind Energy Council (GWEC) and Chinese Wind Energy Association (CWEA) found that many leading companies in the Chinese supply chain had resumed production by early February and were ramping up to full output.
However, BNEF believes the Chinese wind power sector is unlikely to make up for lost time ahead of the country’s onshore wind feed-in tariff expiring at the end of the year.
Projects approved beyond 31 December 2020 will be unable to claim support.
Understaffed government departments will be slow to issue permits for the delivery of some large components, the analysts also suggested.
In some cases, local residents were blocking roads in an attempt to isolate villages from the spread of the coronavirus, preventing or hindering delivery of components.
As a result, BNEF cut its forecast for 2020 installations in wind power’s largest market from 31.1GW to 27.5GW in a pessimistic scenario.
This revision includes an 800MW reduction in projected offshore installations to 3GW.
United States
Developers in the US need to begin project construction before the end of this year in order to take advantage of the expiring production tax credit (PTC).
This has created an over-stretched supply chain, leaving little slack in construction schedules, with a particularly high demand for cranes, BNEF explained.
Projects with turbine delivery due earlier in the year might receive turbines only after the crane has left for the next project, the analysts suggested.
But US installations tend to be heavily weighted towards the end of the year, they added, meaning this impact is largely avoided for now.
BNEF also warned that timing of future offshore capacity could be impacted by understaffed or distracted government agencies.
For example, permits for new wind farms, new lease auctions or even capacity auctions could be delayed.
Wider impacts
The coronavirus outbreak could also jeopardise wind farm maintenance, slow down legislative processes and prevent transactions being made, BNEF believes.
A prolonged outbreak could prevent technicians from servicing wind farms, lowering availability and reducing generation. This would disproportionately impact older projects, the analysts stated.
Recently installed turbines are more likely to be connected to digital platforms, which means they can be monitored remotely.
Operators can use predictive maintenance to better schedule servicing schedules and lower loads to extend component lifecycles.
As governments focus more on responding to the outbreak, key legislation for helping the wind power sector could be delayed.
The analysts noted that few European countries have a policy plan for renewables build in 2021, Vietnam is yet to finalise a new feed-in tariff for wind for 2020, the Netherlands is due to auction 700MW of offshore wind in April, and Poland is currently processing its offshore wind law.
All of these policies could be delayed as parliaments are shut down and governments work on emergency measures.
Cancelled trade events and company travel bans are also threatening to weaken transaction volumes in the first half of the year, BNEF warned.
Wind power companies will miss out on networking opportunities and, for example, opportunities to learn about financing and structuring subsidy-free deals.
