How Virus Outbreak May Change Solar Manufacturing: BloombergNEF

“The demand for solar has never been stronger,” said Andy Klump, chief executive officer of Clean Energy Associates, in an interview with BloombergNEF in Houston in late February. Read sections of the Q&A below:

Q: Will there be any long-term industry changes [due to COVID-19]?

Andy: You’re not going to see the industry shift to the U.S. in any meaningful way. It wouldn’t be cost-effective, and it takes five-plus years to build up a supply chain. I could easily see more of the Asian suppliers shifting to South East Asia with their subcomponent suppliers — Vietnam, Malaysia and Thailand. We also see a little bit starting in Cambodia.

Q: How will companies prevent future disruptions of the supply chain?

Andy: One of the natural outcomes is going to be a flight to quality. Folks are going to look at the larger manufacturers who have more stable supply chains, but there’s a limitation on the number of players who fall into that bucket. There’s going to be a lot more discussion about who else has a stable supply chain. They’ll have to research fully and partner with strong international suppliers who have local supply chains which are not dependent only on China. There are some up-and-coming players with stable supply chains, but you can’t have a supply chain in the U.S. and in South East Asia and in China.

Q: Does the recent decline of the world equity markets have an effect?

Andy: It doesn’t really cause the publicly traded companies any harm just yet. There may be a long-term systemic shock. But financing of long-term solar projects aren’t dependent on the current level of the market. There are pension funds and infrastructure funds and insurance companies and the like that are willing to finance long-term solar at a fairly reasonable cost of capital.

Q: China’s also ramping up its efforts in energy storage. How are the growth rates for solar and storage?

Andy: Storage is growing much faster on a percentage basis, but it’s a much smaller portion of our business. The overall growth rate of solar has been very strong, especially in the U.S. and Europe. There’s a huge demand in the U.S. because of the investment tax credit. Last year was bad for storage, but there’s a lot of planning going on for the 2020-21 pipeline.

Read the full article here: How Virus Outbreak May Change Solar Manufacturing: Q&A