In efforts to stop the spread of the Coronavirus across its worker base, Chinese factories have been closed for almost a month, large gatherings have been banned and travel curtailed – and the knock-on effect has been felt across the world.
It was reported yesterday, however, that the Chinese government has been urging officials to “reach goals and tasks of economic and social development,” while at the same time, keeping the mandate to reduce infections at all costs in place.
As a result, businesses are reopening, albeit with a reduced workforce and challenged and depleted supply chains. To deal with labour shortages, authorities are promoting ‘employee-sharing’ whereby employees from firms which have not yet opened are ‘shared’ – in one case, utilising staff from a film studio to work on a production line in a lighting factory.
Across Europe, the impact of the virus has been felt as well, with almost half saying they would likely re-look at their financial outlooks for the first six months of 2020. Nearly a third of American company’s report being similarly affected.
In the energy sector, the impacts have been felt across the global solar PV supply chain, across energy storage, in certain oil and gas-related sectors while numerous industry events have been cancelled, postponed or poorly attended.
Impact on renewable energy
Production delays for both wind turbines and solar panels will be felt throughout the year, as production delays impact supply chains and order fulfilment. In addition, it is anticipated that the impact on China’s residential renewable market will be significant, with Wood Mackenzie anticipating a decrease of as much as 50% in turbine installations in that country. It is further anticipated that as much as 6GW of wind power capacity in the US could be impacted by the virus this year. Global wind turbine manufacturer, Vestas, have reported that the impact on their business is still being assessed. Manufacturing of blades and other components for Vestas wind turbines is undertaken in China.
Local production of solar panels will also be affected due to the number of raw materials sourced from China. This could mean a rise in the price of solar panels and products around the world for a short period. Many of the provinces affected by the Coronavirus in China are at the heart of the solar manufacturing industry.
Impact on battery storage
Insiders have warned that battery manufacturing will be impacted as Hubei province, where the virus originated and has struck hardest, and surrounding provinces are responsible for manufacturing almost 60% of China’s batteries.
The impact is likely to be felt across all sectors – such as computer manufacturing and mobile phones – but what will the impact be on the electric vehicle sector? Tesla, for instance has been affected by the closure of its new Chinese factory, and predict that deliveries of the Model 3 will be impacted as a result.
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Oil and gas sectors
While not a traditional focus for Smart Energy International, I think it’s important to consider the implications of oil and gas as part of the greater energy sector globally. The International Energy Agency reports that oil demand will drop in the wake of the virus. OPEC has just recently cut supply by 400,000 barrels a day, but it is a question of whether this is enough to make an impact on global prices.
The question, however, is: How do you anticipate the Coronavirus impacting the energy sector?
What will the impact be on:
- Investment in the sector?
- Production levels?
- Smart meter and meter component supplies?
- Climate change reduction efforts?
Until next week!