The coronavirus could reduce China’s battery storage production capacity by as much as 10% to 237 gigawatt-hours this year, according to research by Wood Mackenzie.
Based on operational and announced capacity, this represents over 26GWh of production for 2020 and more capacity could be affected if delays persist, the analysts said.
The Chinese government has taken several measures to minimise human-to-human transmission, which have affected battery cell production, Wood Mackenzie said.
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 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.”
Tight battery cell supply could slow down the cost decline of electric vehicle manufacturing and energy storage systems, Wood Mackenzie said.
Australia and China were expected to grow an additional 1GW of capacity for storage deployments in 2020 pre-coronavirus outbreak.
Utility-scale front-of-the-meter storage deployments drive both markets’ growth for renewables-plus-storage installations to reduce curtailment and ancillary services participation, the analysts said.
Tight battery cell supply could cause delay risks to storage deployments, it added.
Xu said: “Moreover, China’s BYD is a key supplier to UK storage markets, so its production loss in Q1 2020 could impact UK developers.
“Also, Chinese lithium-iron phosphate batteries have received renewed attention in the US market following supply chain tightening in South Korea in 2018.
“Developers who may have turned to the less-expensive technology may find their supply, unfortunately, affected again.”