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Gearing up forthe winds of change

India
Typography

In December, the world’s biggest wind turbine manufacturer, Vestas, called for a huddle of all its vendors in south India, to give them one simple message: gear up.

Vestas, a respected name in the Indian wind industry, shut shop in India in 2012 only to return to this growing market three years...


In December, the world’s biggest wind turbine manufacturer, Vestas, called for a huddle of all its vendors in south India, to give them one simple message: gear up.

Vestas, a respected name in the Indian wind industry, shut shop in India in 2012 only to return to this growing market three years later. But in the three-year interval it had lost much. It practically missed the boom of 2015-16 and 2016-17, when India added 3,472 MW and 5,400 MW, records for those years.

Those were the years, apparently, when the Denmark-headquartered Vestas was busy warming up. It set up a ₹500 crore plant in Gujarat, which makes for the first time in India, light-weight, carbon fibre blades. It began marketing, spreading the message that it was back with a bang in India.

The result of the groundwork seems to call for ordering of champagne bottles. In the calendar year 2017, Vestas took in orders for 620 MW, of which 435 MW came in the October-December quarter, 96 MW of which came on the last day of the year. The order intake included a chunky 250 MW from Ostro Energy, which won the mandate to set up the 250 MW in the country’s first ever auction of wind capacity.

Vestas has told its vendors to get ready for more. One vendor who was present at the meeting said that Vestas believed the Indian market would grow to 10,000 MW a year soon, and Vestas aimed for a 40 per cent market share.

That sums up the mood in the Indian wind industry today.

Wild swings

Its sentiment has been swinging back and forth wildly. In the beginning of 2017-18 the industry was euphoric, with the previous year’s installations having touched a dizzy figure of 5,400 MW. There was promise of a lot more from the government’s newly-discovered approach of capacity auctions. Foreign turbine and components manufacturers were talking of investing either in greenfield facilities, or expansions.

But within months, the euphoria disintegrated as wind power tariffs fell — to ₹3.46 and ₹2.64 per kWhr respectively in the auctions of February and October. Comparatively, the lowest price of wind power till then had been ₹4.16, which the Tamil Nadu utility paid the wind energy companies. After the first auction, various State utilities froze signing of power purchase agreements at the fixed tariffs to come out with their own auctions, while also not being prepared to roll out the bid-outs. The second tariff made things worse. The mood in the industry turned despondent. In April-December 2017, the country added a paltry 569 MW, compared with the target of 4,000 MW for the full year.

Yet, most in the industry knew that if they could hold on tight for one year, things would improve as more capacity auctions would inevitably happen, either by the Centre or the State utilities. The challenge was how to hold on for one year.

Patience paid off

It turns out they managed to. Vestas was not the only one that out-stayed the impasse. Suzlon has reported that it sold 844 MW worth of machines in the first nine months of the year, and is said to be aiming at record sales for the full year. Siemens Gamesa said in January that it has secured orders worth 326 MW — not a great number, but nevertheless respectable. The company also rode out of the woods by securing orders for construction of 160 MW of solar — a relatively new business. Envision Energy, a Chinese company, is said to have bagged an order for close to 200 MW — which would make it the first Chinese company to make any meaningful sales in India. ReGen Powertech, a company that many in the industry seem to be bearish about, is said to have bagged enough orders to avoid being swept away.

Now things are looking up again, as evidenced by Vestas’ display of confidence. The Centre’s third capacity auctions for 2,000 MW is now on, and the winning tariffs would be known by the time this article is on the printing machine. Most expect tariffs to firm up a little, from the low of ₹2.43 seen in the 500 MW tender of Gujarat.

Talk of investments have resumed. Enercon, the German wind turbine biggie, a household name in India till its acrimonious spat with its erstwhile Indian partner, has said it intends to come back, this time on its own, with a flurry. It has begun to offer its machines to energy companies for delivery in 2019-20. These machines — 3.5 MW — will be the biggest to be sold in India. The company is looking to set up manufacturing in India. K K Wind, a Danish company that makes power electronics for wind turbines, recently opened its facility in Bengaluru.

The Centre has announced an offering of 6,000 MW over the next four to five months (which includes the 2,000 MW that is underway) and the confidence that these capacity auctions will happen has buoyed the industry’s mood. “A clear auction calendar is a welcome move and is very encouraging for the industry at this point in time and will accelerate capacity additions,” says Ramesh Kymal, Chairman and Managing Director, Siemens Gamesa India. He says the Indian wind market “will stabilise in 2018 and fully recover in 2019”.

Upscaled targets

A piece of news emerging from the Ministry of New and Renewable Energy has also helped raise sentiments. As is well known, the Ministry had set a target of 60 GW for wind and 100 GW for solar, to be achieved by 2021-22. Of the 100 GW of solar, 40 GW was to come from rooftop solar plants — against this, the achievement is barely 2 GW. Realising that there is no way the rooftop target can be met, the Ministry is said to be toying with the idea of shifting 20 GW from the rooftop solar target and adding it to the target for wind, so as to make the latter 80 GW.

The intention to upscale target for wind would need to be backed by support. Thus, towards the end of this financial year, the mood in the industry is one that expects acche din.


Read full article on Hindu Business Line CleanTech


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