- Coronavirus is threatening to stall growth of electricity storage capacity.
- Projections of rapid growth in sector now in doubt and may damp enthusiasm from investors.
- U.S. energy storage installations surged to a record in the fourth quarter and was projected to post a 14-fold increase in capacity by 2025.
The coronavirus outbreak may soon claim another victim: the boom in sales and installations of massive batteries for storing solar- and wind-generated electricity.
The growth of clean energy depends on increasing storage capacity that enables a steady distribution of power when current supply falls short, such as after the sun sets or the wind is calm. Storage growth in the U.S. has been impressive and projected to accelerate in the next few years. The rosy outlook is now under threat.
The U.S. will add 7.3 gigawatts of storage each year by 2025, a 14-fold increase over 2019, the Energy Storage Association and Wood Mackenzie Power & Renewables said earlier this month. The industry just capped its biggest year of installations with a record quarter, according to a report. COVID-19 has upended those forecasts, and the sector is now experiencing delays and asking for government help.
“Work, goods and people movement restrictions will have a negative impact on all stationary energy storage markets until restrictions are lifted,” Rory McCarthy, Wood Mackenzie senior research analyst, told Karma.
This isn’t just an American problem. The energy storage boom was already slowing in Europe before the outbreak of the virus and the European Association for Storage of Energy is calling on the European Union to pass a clean energy package to revive growth.
While Chinese factories are reopening, plants elsewhere are closing, leading to delays and cancelled shipments. Manz AG, a leading maker of equipment used to make lithium-ion batteries and other storage equipment, said it will close its German and italian locations through at least April 9 because of the pandemic.
The outbreak and related disruptions have highlighted the need for diversified supply chains and regional manufacturing hubs in major demand regions in Europe, North America and Asia, according to a BloombergNEF report.
“Our early analysis back in February put 66% of global battery supply at risk, with battery production expected to take a 10% hit in 2020,” McCarthy said. ”As manufacturing begins to get back to normal levels in China and South Korea, we are witnessing major coronavirus mitigation efforts take hold downstream in major demand markets in Europe, U.S. and Australia.”
Travel restrictions and the shutdown of government-permitting offices are also holding up projects and threatening jobs. A survey of Energy Storage Association members and the wider energy-storage community this month showed that 62% of respondents are experiencing delays in project deployment, and 37% are expecting the delays to last six months or longer.
In the long run, the COVID-19 outbreak might have a greater impact on battery demand than supply, BloombergNEF said. The strong pace of combined solar-storage instillations at homes probably will slow as the outbreak hurts family budgets, IHS Markit said. The U.S., Germany, Italy and U.K. are feeling the brunt of the outbreak, and are projected to see a 10-15% decline in new residential installations this year compared with 2019.
Analysts also warn that coronavirus may lead policy-makers to turn their attention to more urgent needs, slowing legislation and potentially hurt solar, wind and storage construction in 2021.
The Energy Storage Association warned this week that the outbreak will threaten the sector, which employs 60,000 in the U.S. The industry group called on Congress to extend energy investment tax credits and enact new tax credits for stand-alone energy storage.
“The hope is that things will be contained over the coming weeks and months and installations can pick up in the second half of the year,” McCarthy said. “It is likely that the wider industry will understand the necessity of delays and can accommodate these going forward.”
Photo by Sean Gallup/Getty Images