As you think about your battery energy storage projects in the coming weeks and months, the coronavirus pandemic will surely also be on your mind. As you make plans, here are some things to consider:

  • Transportation and shipping of existing orders will likely be delayed. The battery production slowdown in Asia following the initial COVID-19 outbreak had an almost immediate impact on large U.S. ports. Los Angeles and Seattle, in particular, have reported significantly fewer shipments, which led to local port layoffs.

    These events occurred well before the U.S. began taking drastic measures to slow domestic spread of the coronavirus. As Asia resumes production and is running at higher capacity, there likely won’t be sufficient workers available at U.S. ports to offload cargo. As of late March, we had not seen a significant decline in U.S. over-the-road trucking capacity. Should that industry be affected, major supply chain disruptions would be possible for not only energy storage, but for consumer goods as well.
  • Supply lines are being disrupted. Battery manufacturers in Asia have experienced production disruptions for several reasons. For one thing, subsuppliers were unable to deliver necessary raw materials and components. In addition, the blue collar laborers necessary for assembling the batteries were in short supply. Coronavirus issues evolved during the Chinese New Year holiday, and many workers who were abroad visiting family had a hard time returning to factories due to mandatory quarantines.

    The lockdown in Asia reduced output significantly through February. Some manufacturers are now starting to come back online, with some expected to reach full output capacity by the end of March. Others retooled some of their manufacturing capacity to products for the pandemic. After a quick two-week conversion, battery-maker BYD, for example, switched from producing batteries to manufacturing millions of face masks and hundreds of thousands of bottles of disinfectant per day. Even with manufacturing lines now coming back online, BloombergNEF recently estimated that the slowdown could reduce lithium-ion battery production to 9 gigawatt-hours (GWh), down by 3 GWh.

    In the U.S., the pandemic’s impact on the construction labor supply could also lead to significant project delays. These delays may further complicate the technical issues associated with the care, storage and maintenance of battery modules shipped from the factory or already on-site.

    One possible ray of good news exists: While tariffs have taken a back seat amid the pandemic news, it is possible that the supply chain diversification efforts taken as a result could help mitigate the coronavirus’s impacts. To avoid tariffs on Chinese goods, some manufacturing was moved to other parts of Asia that have either not been as significantly impacted by the virus or are already starting to recover.
  • It’s still too early to assess the full breadth of the pandemic’s impact on battery storage projects and decarbonization goals. We might expect state and federal government legislative processes will be diverted away from clean energy to deal with more pressing economic issues. It is also likely that the economic slowdown will affect rooftop and other solar installation and electric vehicle adoption. It is entirely possible that a reduction in lithium-ion battery demand in 2020 could balance the reduction in supply. Market volatility may also affect investors and their ability to raise equity.

Obviously, the pandemic is a rapidly developing situation, and things will continue to change. But once this crisis passes, the industry will almost certainly rebound. Our future depends upon it.

Chris Ruckman, vice president at Burns & McDonnell, oversees the development of energy storage solutions to meet growing electrical grid challenges. An electrical engineer with more than 25 years of experience, Chris combines a passion for sustainable solutions with his deep technical understanding of the utility industry to develop safe, reliable and cost-effective energy storage solutions.