Stepping Up Against Recession

The outbreak of the coronavirus pandemic (COVID-19) has led to a slowdown in economic activity in China, which also affects the wind industry. Now that China has passed the peak of the pandemic, data and analysis company GlobalData is venturing a first look at how hard the industry will be hit by corona.

China has the world's largest installed wind power capacity with more than 230 GW, a share of more than 35 percent of the global market. Since the Chinese have been able to get their grid connection problems under control and connect new plants promptly, the country has also seen the world's largest annual increase in wind power capacity. New installations of 24 gigawatts were expected for 2020.

Somik Das, Senior Power Analyst at GlobalData, takes a look ahead: "The outbreak is likely to impact installations equivalent to a massive 2GW – bringing down the installation to 22GW in 2020. A similar impact is expected for the supply of raw materials and components to orders outside China."

In China, the first quarter of the year was already massively affected by production stoppages and delivery and logistics problems. Enormous backlogs in orders are also expected for the second quarter. Although a number of large Chinese turbine manufacturers such as Goldwind, Envision, Mingyang and Shanghai Electric as well as foreign manufacturers like Vestas, Siemens Gamesa and GE Renewable Energy have already resumed production in the first week of February, the factories are not yet running at full capacity again due to quarantine.

How to get out of the crisis quickly is the focus of the considerations of politics and economy (Image: Pixabay)

In Europe, on the other hand, the pandemic arrived somewhat later, so that the effects will be felt above all from the second quarter onwards. It is now up to the governments to keep the economic impact as low as possible. In China, for example, it is expected that an end to government support for wind energy, which was planned for December 2020, will be postponed.

In France, a further round of tenders for solar projects took place this month as planned. In addition, the government is accommodating the developers: the deadlines for commissioning have been relaxed and the schedule for further tenders has been adjusted, according to GlobalData.

"In the current pandemic situation, uncertainty looms large over the renewable sector. In these times, such initiatives from the government will prove to be a real boon. These lessen the distress of the developers and will help them perform better in the second half of the fiscal year," said Das.

In Germany, too, the Federal Network Agency has reacted unbureaucratically and published new information on current and upcoming tender rounds for renewable energy projects and combined heat and power plants. Among other things, award decisions will not initially be announced in the Internet - this means that neither implementation deadlines nor periods for penalties for not completing projects on time will start. Likewise, an extension of the implementation period for bids for onshore wind and biomass will be granted by the Federal Network Agency on informal application. "It's good to see that pragmatic action by the authorities and political declarations of intent go together well here", comments Matthias Zelinger, Managing Director of VDMA Power Systems, on this temporary decision.

Because only if politics and industry pull together will it be possible to quickly overcome the impending economic crisis.