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Solar Industry Waits to Assess Ripple Effects From China’s Coronavirus Outbreak

The impact for the solar and storage industries will depend on how quickly China’s enormous clean energy supply chain can return to full production.

The novel coronavirus, a respiratory illness that’s sickened more than 17,000 and killed more than 360 people in China as of Feb. 3, may impact the Chinese-rooted solar energy supply chain, potentially contributing to labor shortages, equipment delays and global price increases.

Determining the full impact of the virus is currently impossible due to high uncertainty. Cases of the virus, which originated in the Chinese province of Hubei, are still rising and have been reported in more than 20 other countries.

“At this point, this is still early in the development of the epidemic, and many different scenarios could play out,” Xiaojing Sun, a senior solar analyst at Wood Mackenzie Power & Renewables, said in a Jan. 31 interview. “It’s still very fluid.”

Because the virus’ rise occurred during the Chinese Lunar New Year, the Chinese government extended the holiday to prevent its spread. Work shutdowns continue at several module manufacturers, and production is unlikely to start back up again until well into February.

“Everything is on hold until at least [February 3], and that’s just official Chinese policy,” said Sun. “Many local governments want their laborers to resume work a little later.”

But shutdowns through February 9 apply in several provinces with a solar manufacturing footprint including Jiangsu, Zhejiang and Anhui. Companies including Trina, Hanwha Q Cells, JA Solar and Enphase have manufacturing facilities in those locales, according to a Thursday note published by Roth Capital Partners.

Hubei, the province where the first case of novel coronavirus was reported, is home to many laborers who work elsewhere, according to Sun. Quarantines there could put further pressure on Chinese companies, which may experience labor shortages as they restart production.

Potential impact on global solar pricing
Sun said the Chinese government may also extend restrictions if the number of newly reported cases of the virus does not begin to drop. If the timeline on delays stretches further into February and March, it could hit production elsewhere.

“[Southeast Asian] module manufacturers to a large extent rely on Chinese suppliers for things like backsheets, frames, junction boxes,” said Sun. “If there is a long hold on those in China, their module assembly capacity may eventually be affected.”

Read full article at GreenTech Media