Welcome to the second issue of Quick Tips, a new monthly publication from AEGIS Loss Control. Each month, we will send you useful information on industry observations, products and services that will help you maintain safe and reliable operations.
How the Coronavirus Pandemic Is Affecting the Renewable Power Industry
The coronavirus pandemic is affecting all aspects of the energy and utility industry, including renewables. It’s notable, however, that while the overall demand for energy has dropped dramatically around the globe due to the pandemic, the renewable energy sector continues to expand. In fact, demand for wind power is at an all-time high, both domestically and internationally, with wind accounting for 40% of all new utility-scale additions in the United States. No industry, of course, is immune from the pandemic, and here’s what we’ve learned about the effects on the renewable sector.
Manufacturers slow production and close plants
- The responses from wind manufacturers vary by region. In Spain, the government locked down the country on March 31, and the Vestas, LM, Nordex and Siemens Gamesa factories were closed. They have since reopened but are behind on production. All Latin American wind manufacturing plants had reopened as of April 15.
- In the United States, LM temporarily closed its Grand Forks, North Dakota blade manufacturing plant after many employees tested positive for COVID‐19. The LM blade plant in Little Rock, Arkansas is permanently closed due to low demand for 44m and 62m blades, unrelated to the pandemic. The Grand Forks manufacturing plant will produce these blades when it reopens.
- TPI Composites plants have significantly reduced production in Newton, Iowa; Chennai, India; Izmir, Turkey; and Matamoros, Mexico.
- GE Renewable Energy has slowed production due to pandemic-related supply chain issues.
The ripple effects from China
- The wind power industry relies on a global supply chain. Many fundamental parts and drive train components originate in China, where manufacturing has been significantly disrupted.
- China’s wind power installations are down 10%, or 2GW, and they are expected to remain suppressed for the balance of 2020. Chinese brands, as well as companies such as Siemens Gamesa, Vestas and GE, are feeling the negative effects.
- The solar industry supply chain has also been affected by the disruption of Chinese manufacturing.
Construction delays driven by acceptance testing and supply chain issues
- AWEA (American Wind Energy Association) has estimated that 25GW of wind projects, which represent $35 billion in investment and 35,000 jobs, are at risk from construction delays.
- Some Builders Risk projects AEGIS insures have been delayed by one to three months. The issue has been acceptance testing, not supply chain problems. Acceptance testing requires teams of engineers and technicians to visit the sites, where access is currently restricted.
- Third- and fourth-quarter wind power installations will be affected most. Supply chain interruptions, smaller pools of healthy workers, and work restrictions due to the pandemic will likely cause delays.
Operations and maintenance hindered by supply chain and social distancing
- The component supply chain produces parts primarily for new construction and, on a more limited basis, for replacement components. With manufacturing slowdowns, this will affect downtimes for damaged or inoperable wind turbines. There is speculation this could increase downtimes from 30 days to as many as 180 days for a broken gearbox, for example.
- Wind power technicians typically work in pairs or triplets and in close quarters, which makes providing services a challenge in this environment. There also continues to be a shortage of qualified wind power technicians, especially in the United States.
- Operations and maintenance for renewable installations will likely be affected. While yet to be seen in the wind power sector, conventional power plants have had pandemic-related issues with operations and maintenance. Outside contractors providing support services are the weak link.
For additional information or support, please contact one of our AEGIS Loss Control Property Operations team members:
Anthony Martin
Senior Machinery Engineer
Renewables Working Group
Loss Control Property Operations
201.508.2722
AnthonyMartin@aegislimited.com
Joshua M. Fleischer
Vice President
Loss Control Property Operations
201.508.2637
JoshuaFleischer@aegislimited.com
Gregg Basnight
National Machinery Manager
Loss Control Property Operations
201.508.2730
GreggBasnight@aegislimited.com
Jim Mintel
Machinery Technical Lead
Loss Control Property Operations
201.508.2741
JamesMintel@aegislimited.com
Tom Clark
National Property Manager
Loss Control Property Operations
201.508.2755
TomClark@aegislimited.com
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