The Coronavirus in China is likely to impact the solar industry in Africa, as supply chain is affected due to extended work stoppage in eight key solar manufacturing provinces – ROTH Capital Partners has said.
ROTH, an investment banking firm, noted that within the eight provinces, notably Jiangsu province, was home to a number of ‘Solar Module Super League’ (SMSL) members major manufacturing hubs, including Canadian Solar, LONGi Group, Trina Solar, Q-CELLS and JA Solar.
ROTH said in an investor note many PV manufacturers continued some level of production during the Chinese New Year holiday period. “Our guess is that while most of the facilities have been up and running, they likely have not been running at 100% staffing.”
With the extensive Sino-African ties, a downturn in Chinese manufacturing will directly or indirectly impact the solar industry growth witnessed in Africa in the past years.
In the last two years, the African continent initiated major solar projects that in one way or the other have relied on the global supply chain of solar photovoltaic systems, where China is a notable industry player.
Investors are worried that Africa’s reliance on the Chinese market is a significant liability that could put significant pressure on African market, particularly in Nigeria, Kenya, and South Africa.
According to ROTH capital, shortages of solar wafers, and possibly glass for PV modules were emerging due to ‘limited’ continued production in China. This would likely lead to near-term solar supply chain component pricing increasing.
The solar industry has been booming in Africa with mega projects underway.
In 2019, Siemens and WestPark Enterprises signed an MOU in Ghana for the development of an expandable microgrid solution for the fast-growing industrial and business park based in Takoradi, Western Ghana.
Zimbabwe’s largest industrial solar power plant with a generation capacity of 466 KW installed with 1,435 panels was launched, being the country’s first industrial solar power plant.
2019 also saw Kenya, Egypt and South Africa launch multi-million solar off-grid projects with different output capacities.
Regardless of whether cases of coronavirus are diagnosed in Africa, Africa is already being affected by the outbreak. The developments and anticipated Chinese economic losses will affect commerce between China and Africa.