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Business

India's wind showing promise as a profit generator

This wind farm, in the northwestern Indian state of Gujarat, is operated by Suzlon.

MUMBAI -- Call India a hotbed of power -- wind power.

     Conditions in the country have conspired to favor companies that can harness gusts and turn them into electricity. India already is the world's fourth-largest generator of wind power, and demand is growing.

     This has companies, both domestic and global, jockeying for position.

     Among the conspirators are Indian municipalities, which are pushing for greater use of wind power to bolster their electricity-generating infrastructure. They are not just pushing; they are also introducing feed-in tariffs, guaranteeing that wind-generated electricity will be purchased at a certain price. Essentially, feed-in tariffs ensure profitability for wind farmers.

     Coal is another co-conspirator. For years, India has relied mainly on coal-fired power plants. But burning coal fouls the air with massive amounts of soot and heat-trapping gas. Worse yet, Indian coal is generally of poor quality and mostly unsuitable for power generation. Therefore, the country imports much of the coal it uses for power generation.

     The third co-conspirator is energy security, the desire for which is driving the country away from coal.

     Finally, there is the wind itself. The southern and northwestern parts of India can count on a stable supply of wafting, according to Shri Subramanian, chairman of the Indian Wind Energy Association.

     So why not take advantage of this climatic advantage?

     At the end of 2015, India's wind power generation capacity came to approximately 25 gigawatts, equal to the output of 25 nuclear power stations. This made India the fourth-largest wind power generator, after China, the U.S. and Germany.

     Let's take a look around the northwestern state of Gujarat. Here, rows of about 750 wind turbines, 80 meters to 120 meters tall, stand imposingly on vast parcels of barren land. Their blades roar as gusts of nature push them into action.

     They are the trees of a major wind farm operated by leading Indian power company Suzlon Energy. Their fruit, electricity, is transmitted via a state-run power enterprise and other companies to 600,000 households.

     Suzlon has a factory near the power station in which its engineers use an industrial crane to assemble gigantic wind turbine blades. Nearby is a cluster of factories that make turbine foundations as well as electrical equipment.

     Traditional craftwork used to be the industrial mainstay in this part of India; now the area is a tempest of power.

     The International Energy Agency sees Indian wind farms generating about 100GW by 2030, which would move India past Germany on the wind power generation list. The ratio of wind power to India's overall power generation is projected to reach 13% in 2040 from 8% in 2014.

     India's shift to wind power has meant rapid growth for Suzlon. The company has built a number of turbine factories across India. At one time, it controlled over 50% of India's turbine market.

     Suzlon now is capable of producing 1,700 turbines -- with 2.1 megawatts of output per turbine -- at its 10 domestic factories. It exports to more than 17 countries, including the U.S. and China. Consolidated sales totaled 198.4 billion rupees ($2.99 billion) in the year through March 2015.

     Foreign companies have also been eyeing Indian demand for wind power.

     In 2009, Spain-based Gamesa set up its first plant in Chennai, southeastern India. Within five years it had secured enough contracts from power companies across India to grab the top spot on India's wind providers list.

     Gamesa customizes its world-leading products to the Indian market, said Ramesh Kymal, Gamesa's CEO in India. The company works closely with its U.S. and European research and development hubs. It is now working on high-efficiency wind power generators that can handle India's dusty environment.

     Gamesa posted 3.5 billion euros ($3.95 billion) in sales in fiscal 2015. Its wind power business made up 29% of its total sales in India, according to the company's earnings announcement. India undoubtedly remains a profitable market, Kymal added.

     Vestas Wind Systems, the world's second-biggest wind turbine maker, based in Denmark, in November announced plans to build a new turbine blade factory in India. In March, General Electric of the U.S., the third-biggest player, said it would take part in a feasibility study in India for wind and solar energy projects.

     Suzlon is taking on the foreign competition by refocusing on its home market. Last year, it decided to sell German wind turbine maker Senvion, which it had acquired in 2009.

     Suzlon Chairman Tulsi Tanti told a local newspaper that his company has decided to focus on the domestic market, U.S., China and Brazil. Meanwhile, it is moving to build three new turbine blade plants in India this year, the chairman told the paper.

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