The Chinese government has implemented measures to help control the spread of the coronavirus that will put constraints on the global solar module supply chain, according to Wood Mackenzie.
The measures include restricting movement and extending the Lunar New Year holiday.
Wood Mackenzie senior analyst in the energy transition research team Xiaojing Sun said: “At present, solar manufacturers may not be able to resume production until 10 February at the earliest.
“It is unclear how soon the travel controls will be lifted. If they remain in place, production from Chinese manufacturers will be reduced.”
She added that although factories located in mainland China will feel the worst adverse impact, overseas module assembly facilities that rely on imports from China for frames, backsheets, and junction boxes will also be negatively affected.
Sun said: “Module production in south-east Asia and the US usually carry one to two months of supplementary material inventory on-site.
“If the production interruption in mainland China lasts longer than one month, factories in south-east Asia and the US will start to see supply shortages that will reduce their production output.”
China produces the majority of the global industry’s modules and so any potential strain could have an impact farther afield, she said.
“Developers waiting for module delivery from mainland China in March and April will not see the orders delivered on time, while deliveries due late in the second quarter of 2020 are also likely to be delayed, she added.
“Late module delivery will affect project construction schedules around the world, and projects with Q3 and Q4 2020 placed-in-service dates are likely to be hit particularly hard,” the analyst said.
Wood Mackenzie added that Vietnam, Malaysia and the Philippines have imposed visa restrictions on visitors from China, including Chinese workers and management staff at solar manufacturing facilities in those countries.
This will affect the production of many Chinese module makers’ subsidiaries in south-east Asia, lowering the total module output, the company said.
Sun said: “The supply interruption also means that potential price inflation may come earlier.
“Wood Mackenzie had forecast that module oversupply would depress prices this year. Delays in China, depending on their duration, would soften any price dip.
“If activity is restored by the end of February, the impact is likely to be short-term.
“However, if restrictions remain in place longer, then the impact on supply in China will be significant, choking the country’s output.
“The longer strict public health measures stay in place, the more likely it is that prices will be pushed higher in the second half of 2020.”