Wind giant GE Renewable Energy says coronavirus mitigation a key focus in 2020 | RenewEconomy

Wind giant GE Renewable Energy says coronavirus mitigation a key focus in 2020

GE Renewable Energy says mitigating Covid-19 impact on its enormous wind generation supply chain a top focus, with a hit to cashflow and profits already factored in for Q1.

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Image credit: https://www.windpoweroffshore.com/

GE Renewable Energy says mitigating the impact of the coronavirus on its enormous wind energy generation supply chain will be one of its top-four focuses in 2020, with plant shutdowns in China already forecast to dent the bottom line of parent company General Electric.

In its investor update on Wednesday, the US industrial giant said the impacts of Covid-19 were being felt across the company’s supply chain and flagged a potential hit to its bottom line in the first quarter.

“Covid-19 will hit free cash flow by $US300M-$500M in Q1, as well as operating profits by $200M-$300M,” the investor report said.

“Adjusted Q1 earnings are seen at around $0.10 per share, compared to a pre-coronavirus Street forecast of $0.13.”

GE said it was tracking demand and supply chain impacts of Covid-19 daily – which it described as an “evolving variable” – and noted that all but two of its China sites had reopened after the extended Chinese New Year holiday, although at reduced operating capacity.

The potential impact of Covid-19 on the global wind industry was teased out just two weeks ago in a joint update from the Global Wind Energy Council (GWEC) and the Chinese Wind Energy Association (CWEA).

The statement said a survey of wind energy companies in China – which is a hub of global turbine manufacturing, as well as one of the world’s biggest markets for installations – found local industry and governments both working hard to minimise adverse impact.

“Ultimately, while COVID-19 will adversely impact the wind industry, the supply chain disruptions and installation delays will be moderate and focused to certain geographic regions,” the report said.

“If the virus out of Hubei province is more or less under control by mid-March, we can expect a roughly two to three month delay in executing China’s wind energy project pipeline.”

“If the spread of the virus continues to grow beyond March, the delay period may be extended. However, these delays will be manageable if the NEA agrees to extend the FiT extensions of onshore wind,” it said.

“Despite the material impacts and concerns of COVID-19, GWEC therefore assesses that China will continue to be the world’s largest wind power market in 2020, for both new onshore and offshore wind installations, with minimal impact on the global pipeline of wind projects.

“If the virus continues to grow beyond March, GWEC and CWEA will provide further updates on the impact for the wind industry.”

Meanwhile, major players are taking their own steps to minimise fall-out from a compromised Chinese market.

Spanish-German wind group Siemens Gamesa said in February that it had “started to develop India as a global hub to reduce our dependency [on] China.”

And Danish giant Vestas said in its own results announcement that it was working on the assumption that operations in China – where it has “the most exposed supply chain presence” in the industry, according to Wood Mackenzie analyst Shashi Barla – would more or less return to normal this month.

“If China remains closed for weeks or months, then we are looking at a global pandemic force majeure,” said Vestas CEO Heinrik Andersen at the beginning of February. “Our thoughts right now are with the nearly 3,000 colleagues of ours in China.”

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