Coronavirus Could Keep Wind Industry From Soaking Up More Subsidies
The Coronavirus is disrupting the global supply chain for solar and wind energy because many of the components used in solar panels and wind turbines are made in China, according to multiple reports. This disruption could delay wind projects, which could potentially prevent them from qualifying from recently-extended federal subsidies.
According to a piece in The Washington Examiner:
“Renewable energy relies on a global supply chain,” said Greg Wetstone, CEO of the American Council on Renewable Energy.
“There are very real concerns about the ability to get critically important parts of the supply chain in a timely fashion, and that’s particularly important for our sector because a critical piece of the financing are tax credits,” Wetstone said, adding that those tax credits have hard deadlines.
Wind producers, for example, won a yearlong extension of their production tax credit, but projects must begin construction this year to qualify.”
One reason that so many wind turbine components are “Made in China” is because the components require rare earth elements. According to Wind Power Monthly:
“While there are large deposits in Russia, Brazil, Australia, North America and Tanzania, among other places, China accounts for more than 85% of global production of REEs.
This is largely thanks to the country’s low mining and processing costs, combined with less stringent environmental standards, which enables China to undercut production elsewhere.
The REEs most commonly used in the wind industry are neodymium and dysprosium, plus small amounts of praseodymium.
Alloys of these three are key constituents of the powerful permanent magnets used in everything from smartphones, medical equipment, electric vehicles and robotics to the permanent-magnet synchronous generators (PMSGs) employed in some wind turbines.”
These elements are used because they can produce a lighter and more compact turbine design, which is particularly beneficial at low wind-speed sites and offshore, and they are also easier maintain. However, they are also more susceptible to price spikes when China decides to restrict Rare Earth exports.
Most industries have global supply chains these days, but the temporary disruptions in the wind-turbine supply chain as a result of the coronavirus highlight the fact that wind power is less “domestic” than many of its boosters would lead you to believe.