China turbine makers winded after Ecuador lockdown leaves them without blades

China’s renewable energy industry is facing a supply bottleneck from a belated lockdown in Ecuador, a key market for the balsa wood used in the production of wind turbine blades.

The hiccup is delaying installation of new capacity in the world’s biggest wind power market after Ecuador took tough containment measures, as the coronavirus pandemic sweeps across the world. The country with a population of 17 million has one of the highest infection rates in Latin America.

Travel restrictions and the lockdown have also delivered another kind of headache to industry players in mainland China, as the shortage has led prices for the wood to more than double from a year ago, according to Wood Mackenzie, a London-based resources and energy consultancy.

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Ecuador supplies 95 per cent of the world’s commercial balsa wood, which is known for its strength and light weight. The shift towards substitutes such as polyethylene terephthalate (PET) has been slow relative to markets in Europe.

“Turbine and wind blade manufacturers are working in tandem to replace or reduce balsa and polyvinyl chloride as core materials and switch to PET,” said Shashi Barla, who focuses on wind power supply chain research at Wood Mackenzie.

“Most of the turbine models from western makers like Vestas and GE integrate PET in their blades,” he added. “However, PET adoption in China is very slow due to high demand and time constraints to redesign blades on a short notice.”

Global balsa consumption by the wind turbine manufacturers is expected to fall by 12 per cent to 214,000 cubic metres by 2023 from last year, Wood Mackenzie said. Demand for PET is projected to double to 332,000 cubic metres over the same period.

Balsa made up 38 per cent of wind blade core materials last year, compared to 31 per cent by PVC and 25 per cent by PET, Barla said.

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Demand for the wood from Chinese turbine makers is estimated at between 90,000 and 120,000 cubic metres a year, according to Liang Wanliang, China director of industry body Global Wind Energy Council.

Balsa plantations in Papua New Guinea that sprang up during 2017 and 2018 are now expected to satisfy some demand this year and next year, Barla added.

Xinjiang Goldwind Science & Technology, China’s largest wind turbines maker, said while its blade suppliers have started using a replacement material, the move will not completely replace balsa wood.

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“We have seen balsa wood shortages in 2015 and 2018, and started last year to procure from other countries to mitigate supply risk,” the company’s president, Cao Zhigang, said during an investor forum on Monday. The current situation in Ecuador is expected to impact blade supply in the second half and if it worsens, “the entire industry will be hit”, Cao said.

Wood Mackenzie last month slashed its global wind power installation forecast by 5 gigawatt to 73GW for 2020, citing the impact of the coronavirus pandemic. In China, it was reduced by 3GW to 26GW, little changed from 26.2GW in 2019.

“China lost one to two months of turbine production time due to the viral outbreak, while delays of wind project construction could be up to six months,” Liang at Global Wind Energy Council. “It is likely the government will take actions to mitigate the impact to ensure industry investment, growth and employment.”