European battery providers mindful of possible coronavirus shortages as LG Chem halts production in China

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From pv magazine Germany.

While Korean battery manufacturer LG Chem has announced orders will be affected by the coronavirus outbreak in China, European storage system companies have thus far remained unaffected by supply shortages. That situation could swiftly change, however, as various companies have told pv magazine.

LG Chem has announced its production, and that of its suppliers in Nanjing, will be halted until at least Sunday. The battery manufacturer has warned customers of possible delays in production and delivery and LG Chem said its Korean plants, which manufacture PV storage systems, were also affected by the shutdown in China. The producer said it cannot yet predict when the situation will return to normal.

In Europe, the threat appears less immediate although storage companies have said they are mindful of knock-on effects from the virus, which U.K. newspaper The Guardian this morning reported had claimed the lives of 638 people.

Detlef Neuhaus, MD of German company Solarwatt said: “The manufacture of our storage systems is not affected but we source some raw materials and accessories for our photovoltaic modules from the Chinese market.”

Contingency measures

Fellow German manufacturer E3/DC said it had taken measures to source materials from markets outside China but could not rule out those alternative supply chain companies might themselves be affected by the virus. The outbreak has prompted Chinese authorities to extend new year celebrations and to order people in affected areas to self-isolate for 14 days, affecting production rates at factories in the regions concerned.

“We ensured the availability of battery modules from Korea or Japan at an early stage,” said an E3/DC spokesperson, “but the manufacturers cannot rule out a slight reduction in production for the coming months because they in turn procure some components and raw materials from China. However, it is currently difficult to get information from China.”

The situation is similar at the Senec business owned by German electric utility EnBW. “We are currently not affected and can deliver because we produce and purchase storage and battery modules in Germany and the supply is also ensured for the components,” said a company spokesman. “Should the production be longer halted in China, a shortage on the market for components should be expected.”

Developments in China are also being closely watched at fellow German business Sonnen. “We are currently monitoring the situation closely to see whether quarantine measures can lead to delays in the supply chain but we are well prepared to react accordingly,” the company stated.

Bad prospects

U.K.-based market research company IHS Markit has calculated the global economy could suffer a 0.8% hit to GDP this quarter and a further 0.5% reverse from April to June if Chinese quarantine measures stay in place for the rest of the month and are phased out gradually in March.

That could translate into a loss of 0.4% of global GDP for the year, according to the analysts, although IHS Markit says that could be mitigated by a subsequent 0.4% rise next year, as a result of pent-up demand.

The analysts expect significantly less impact on global GDP if self-isolation, travel restrictions and production stops are lifted by Monday. That would see only a 0.1% drop in output this year, said IHS.

pv magazine has this week reported on how the production rates of Chinese solar manufacturers are being affected by coronavirus, which has thus far had less impact on the Chinese polysilicon industry.