COVID-19 and wind power in India, China and Spain

The Ministry of New and Renewable Energy (MNRE) in India, the world’s fourth largest wind energy market in terms of cumulative installations, has announced that the disruption of supply chains due to the spread of coronavirus in China or any other country should be considered as a case of natural calamity and falls under a Force Majeure Clause.

In response to this statement, all renewable energy projects that are currently under construction in India will receive an extension of their commissioning deadlines. Following the three-week nation-wide locked down imposed on 24 March 2020, all non-essential businesses in the country have been shut down for three weeks. To ensure uninterrupted power generation including generation from renewable power plants, however, limited O&M staff are allowed to work on specific permission from the Regions State Police.
  The Indian governement has approved an economic relief package for the power sector, however this does not include power generation sectors but rather focuses on distribution companies (discoms). The package includes a three-month moratorium on state-owned electricity discoms and waiving penalties for late payments. On 6 April, the government also guidelines for renewable power generators for issuing invoices to discoms as physical invoices may not be possible under lockdown measures. This package is part of the Indian government’s priority to ensure round-the-clock electricity supply to power the country during its 21-day lockdown.

According to GWEC’s pre-COVID market outlook, compared to 2021 and 2022, 2020 is expected to be a slow year for India. Issues pertaining to non-availability of grid and land have already been reported as the challenges impacting the new installations in 2020. Nonetheless, the decisions of MNRE are crucial for the domestic industry as a measure to ease the disruption on the supply chain caused by the coronavirus pandemic and lockdown.

         Focus on: China
In Wuhan, China’s epicenter of COVID-19,  lockdown measures were lifted on the 28 March after two months. However, on the same day, a travel ban on all foreign nationals including those holding a work visa or residence permit came into force in China, the world’s largest wind market in both new and cumulative installations.

The lifting of the lockdown measures in Wuhan is a clear signal that China’s domestic workforce is beginning to return to business-as-usual, but the closure of the country’s borders will still have an impact on the flow of workforce for the supply chain in China, where leading international turbine OEMs and components suppliers have production facilities established in different regions throughout the country.

On 30 March, the China Wind Energy Association (CWEA) launched an initiative that calls on the National Energy Agency (NEA) and National Development and Reform Commission (NDRC ) to postpone the deadline of projects connected to grid by at least 6 months.

This extension will be crucial for China’s wind turbines industry to realise the installation rush that was foreseen for 2020.  More than 60 GW of onshore wind farm projects were approved before the end of 2018 and therefore must be grid connected by the end of 2020 in order to receive the Feed-in-Tariff, as China will move into a ‘subsidy-free’ policy starting in 2021. The pressure is tremendous for wind farm project developers and manufacturers considering the financial consequences caused by the disruption of COVID-19 on the Chinese wind supply chain.
         Focus on: Spain
In Spain, the world’s fifth largest wind market, a nation-wide lockdown was imposed on 14 March. A few days later, wind turbine OEM Siemens Gamesa and component supplier LM Windpower halted work at their blade production facilities in Spain. On 28 March, the government decided to ban all non-essential work for two weeks, from 30 March to 9 April, in a bid to slow the spread of COVID-19.

To comply with the strict regulation, large European turbine manufacturers Siemens Gamesa and Nordex Acciona have suspended production at their turbine nacelle assemblies and more component manufacturing facilities in Spain. For the same reason, Vestas also suspended its blade and generator production at two locations in Spain last week.

As one of Europe’s largest wind manufacturing bases, Spain is home for major turbine producers Gamesa (now Siemens Gamesa), Acciona Windpower (now Nordex Acciona) as well as many other large component suppliers for both onshore and offshore wind. After connecting 2.3 GW onshore wind in 2019, the country is expected to bring another 1.5 GW online this year in order to meet the deadline of reaching its 2020 renewable energy target.

On 4 April, the Spanish government announced that the nation-wide lockdown will now last at least 45 days (until at least 25 April), which is expected to not only incur further disruptions on new installations in the country, but also the turbine and component production for the exported markets as well. Thus, an extension of the commission deadline for wind projects in Spain has become as important as in other key markets such as China and the US.     

         Focus on: India

To comply with the 21-day lockdown in India, both local and international turbine OEMs and components manufacturers have temporarily suspended their production activities in India, although O&M services continue to operate with reduced workforce.

India is the largest wind turbine production base after China in the Asia Pacific region, with annual wind turbine manufacturing capacity up to 10 GW. Suzlon Energy and Inox remaining as the top local suppliers with sizable market share in India today, the rest of market, about 75 per cent, is primarily shared by Siemens Gamesa, Vestas and GE.

When the COVID-19 crisis was first reported in China, disrupting China’s wind supply chain, large western turbine producers began shifting their supply chain by using their Indian facilities as a solution to mitigate the expected damages caused by COVID-19 at their production facilities in China. This strategy is not new, and was first adopted by European gearbox suppliers ZF and Winergy in 2018 to limit the damage imposed by the US- China trade war. However, the lockdown in India has now made this solution unworkable, and western turbine OEMs are now also facing the supply chain disruption challenge in Europe.

India is also one of theworld’s largest wind gearbox manufacturing bases with nearly 10 GW of annual output. At present, ZF and Winergy have halted their production in India and NGC has also suspended the construction work at their upcoming new facility in Sri City. As India is a key wind gearboxes exporter to the US onshore wind market, the disruption of COVID-19 on Indian wind gearbox supply chain is not only expected to have negative impact on its home market, but also the current onshore wind installation rush in the US.