The coronavirus (Covid-19) outbreak has caused a slowdown of China’s economic growth. The International Monetary Fund has cut China’s gross domestic product (GDP) growth outlook by 0.4% to 5.6% but also alerted of further alterations, taking into account the extent and magnitude of the impact of the coronavirus outbreak.
The current scenario in the country is going to have an effect on its power demand and generation. China is a world leader in renewable energy investment. The country has proved itself as a leader in wind power installation, wind turbine manufacturing and solar photovoltaic (PV) manufacturing.
The country’s renewable power sector is experiencing the impact of the Covid-19, specifically wind and solar PV, which could witness lower capacity additions in Q1 2020 due to suspended manufacturing and construction works.
China is a leader in terms of solar PV installations and the production of solar PV panels. The country has the largest installed solar power capacity of more than 205GW, contributing more than 35% of the global installations. China’s annual installation was expected to be approximately 30GW in 2020 and the outbreak is likely to impact solar installations at the end of the year in 2020.
Globally, China is the biggest manufacturing economy, including solar PV equipment manufacturing. The solar sector is expected to face the heat, given the tight capacity in solar equipment manufacturing. Of the top ten solar PV manufacturers in terms of module shipments, the majority of them are China-based. These include Jinko Solar, JA Solar, Trina Solar, LONGi Solar, Risen Energy, GCL System and Suntech. Coronavirus-hit province Zhejiang is home to a few of Jinko Solar’s manufacturing works, the largest Solar Module Super League (SMSL), while JA Solar is also involved in manufacturing operations in the province.
Post Covid-19 outbreak, the Jiangsu province in China took the hardest hit in terms of solar PV production capacity as more than 60% of the country’s solar PV panels are made here as per the Gofa institute, a part of the Chinese government’s National Energy Administration (NEA).
The key manufacturing hubs in the Jiangsu province include Canadian Solar, LONGi Group, Trina Solar, Q-Cells and JA Solar. Due to the outbreak, the solar power market has concerns with regards to material supply shortage and logistical restrictions due to closed borders, which could increase the price of solar modules that otherwise was rapidly plunging. The shortage will delay equipment deliveries and affect the solar sector’s global supply chain.
While the country is beginning to get back to work at a slow pace after the coronavirus outbreak, many factories have not yet started operating at a full capacity due to shortage of staff and raw materials. Solar PV manufacturers such as Trina Solar has alerted about production delays and LONGi Green has commented that there is no significant outcome on its solar PV panel sales and production and its shipment targets will also not experience any changes this year.
The NEA and the State Grid Corporation of China (SGCC) have notified about the threats coronavirus outbreak poses to the power industry and the Chinese Photovoltaic Industry Association (CPIA) has recommended the Chinese government to delay connection deadlines of large-scale solar power projects on March 31 and June 30. In the current situation, late project completion will impact the amount of subsidies received.
The coronavirus outbreak will affect the overall supply chain and solar installations not only in China but globally, mostly the in the US and other countries such as India and Australia, heavily dependent on Chinese raw materials and components. Many solar manufacturing plants located outside of China are dependent on Chinese imports for raw materials such as aluminium framing and solar PV glass.
With more than 75GW installed as of 2019, the US is majorly dependent on solar PV panel production from China. The country is already facing supply bottleneck since the extension in PTC and ITC granted in December 2019. The Q1 production delays due to extended Chinese New Year Holidays as a result of the coronavirus outbreak will worsen the situation for the US developers who will be forced to look out for alternative sourcing avenues.