Energy research group Wood Mackenzie forecasts COVID-19 will reduce China’s battery storage production capacity by as much as 10% compared to the pre-coronavirus 2020 forecast.
The company predicts governmental measures to minimise human-to-human interaction in China, including factory shut-downs, will hit this year’s battery output by 26GWh.
The new production capacity forecast of 237GWh is based on operational and announced capacity for 2020.
More capacity could be affected if delays persist, warn the analysts.
Moreover, UK and US markets could be hit by the reduction in capacity. For example, China firm BYD’s production loss in Q1 could impact UK developers as it’s a key supplier to the countries storage markets.
Also, Chinese lithium-iron phosphate batteries have received renewed attention in the US market following supply chain tightening in South Korea in 2018.
Wood Mackenzie senior research analyst Le Xu, said: “The restriction of labour movement will hurt auto manufacturing in Hubei province, and heavy manufacturing industries in provinces such as Shandong, Jiangsu, Zhejiang, Fujian, Anhui and Guangdong.
“These provinces were expected to contribute 162GWh of battery cell production in 2020 prior to the coronavirus outbreak, equivalent to 61% of China’s cell manufacturing capacity.
“In addition, battery cell factories were also suspended for the past two weeks, including Tesla’s Gigafactory in Shanghai, as a result of the extension of the Chinese New Year holidays as announced by the government.”
Pre-coronavirus outbreak, Australia and China were expected to grow an additional 1GW capacity for storage deployments in 2020.
Utility-scale front-of-the-meter storage deployments drive both markets’ growth for renewables-plus-storage installations to reduce curtailment and ancillary services participation. Tight battery cell supply could cause delay risks to storage deployments.