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Wind CEO says Covid-19 is a moving target

The coronavirus pandemic is a "crisis unlike anything the market has ever seen," says Woodmac and slashes several gigawatts off its annual forecast. There are many potential problems, and it's hard to say when and how hard the effects will hit, says Nordex' CEO.

Photo: Nordex

One of many problems with vira is rapid mutation, which is indeed also the case with the coronavirus, shows a Icelandic investigation from Monday on 40 variations of SARS-CoV-2 that appeared solely on tests within the island nation.

This mutation issue also applies in a metaphoric sense from the perspective of industry. Initially seen as a problem centered in China – which in and of itself is awful enough for, for instance, the wind industry, as much of the world wind turbine production is located in the People's Republic – the crisis has since rapidly spread. Gargantuan efforts are implemented across the globe to mitigate risks posed by the pandemic.

Because the viral development is changing on an hourly basis, it's hard to project the crisis' ultimate consequences. When Nordex recently presented its 2019 annual financial statement, the wind OEM was well aware that observers were very eager to get a status report from the sector. However, the German firm was quite unable to underline very much in bold.

"I would say COVID-19 is a moving target. It's too early to assess.," said Nordex Chief Executive José Luis Blanco about the virus during an investor teleconference on the annual report.

Potential catalyst

Blanco added that the company has set up a "cross-functional Covid-19 task force to monitor and assess and react quickly to the changes in the situation" – a statement that mainly indicates how tough it is to put a finger on both the specific problem and solution.

"What are the challenges that we are facing with this new situation? Basically, I mean, the flow of goods and the flow of people is somehow changing. And this – there are measures by authorities every single day, in every single country that are affecting our activity, and we need to replan in a continuous basis," the CEO said and added:

"We need to evaluate the impact on the business in an ongoing basis. This might trigger possible delays in project execution and in installations. This might trigger impact for sourcing activities along the entire supply chain. This might trigger as well, impact for our factories, if certain critical mass of workers is not achieved."

Or, in other words: the only thing the OEM can say for certain right now is that all its factories are operating, components are available, as is most of the organization's personnel – even though some staff are affected by the disease and others are in quarantine – that is, unless something has changed between penning this article and upon it being read.

The epitome of a unique crisis

The same uncertainty on repercussions also shines through in Wood Mackenzie's latest market update.

"The impact of the coronavirus is top of mind for the global wind industry and embodies a crisis unlike anything the market has ever seen. The state of the pandemic is evolving on an hourly basis, resulting in a highly reactionary environment," writes Woodmac Head of Global Wind Energy Research Dan Shreve.

The analysis firm also offers a tentative projection on specific effects. Since the latest prognosis from November, Woodmac now forecasts a combined annual installation of 73 GW – or 4.9 GW less than previously estimated. The potential significance of this will mainly strike to the world's two largest markets, China and the US, both of which have end-year expiry dates set on the respective subsidy schemes.

Although other other markets are also even harder hit in relative terms. Nations like Italy, Spain and France are closing down more of society by the day, and even though the wind sector's production facilities are thus far exempted from closures in consideration of supply security, complications have still hampered operations.

European delays

Both Siemens Gamesa and LM Wind Power presently have factories temporally shut down in Spain. Vestas has also been obliged to slow down the speed of its Spanish plant due to displeased staff – a dissatisfaction that is increasing coming into view on various social media regarding production in other countries, for example, the UK.

"Risks remain, particularly in Europe, where factory closures will likely result in turbine installation delays, both domestically and possibly for the US," Woodmac writes, assessing that current closures could remain in effect for longer than companies would like.

"Although the stated downtime is measured in weeks, it may take months if the rate of infections in Spain continues to rise," the firm adds.

Meanwhile, border closures could result in problems in getting wind turbine installed, even if the machines can be made in adequate numbers. The Norwegian wind industry, for instance, has already revealed snags in its plans to erect turbines in due time on account of personnel shortages. If the US-Mexico border is closed, this could also cause a few migraines.

India shuts down

On a positive note, China seems to be back up to full speed. Whereas Woodmac' update from Tuesday afternoon highlighted that India – the wind sector's preferred alternative to Chinese manufacturing while the later remained the viral epicenter – has thus far managed to avoid major health problems from Covid-19.

"However, if infections take hold in the world’s second-most-populous nation, it could have far-reaching consequences," Woodmac notes.

Right now, with New Dehli reporting a mere 492 confirmed cases of infection and nine deaths, the pandemic has not yet seriously taken hold of India. On the other hand, the situation mutated again since the Woodmac's report, with political anti-contagion measures now implemented, and the field has once again changed.

Tuesday evening, Indian Prime Minister Narendra Modi ordered a 21-day full public curfew, which, according to EnergyWatch's information, also entails the wind industry's production facilities.

Neither Vestas, Siemens Gamesa nor TPI Composites have yet replied to EnergyWatch's request for comment on the manufacturing situation in the country.

English Edit: Daniel Frank Christensen

Siemens Gamesa and Vestas close with the rest of India

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India shuts completely down

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