Turbine companies to see how the wind blows

As the Union government added a chunky 1,000 MW of capacity to the wind power market through the auction held last month, the fight for a share is playing out like a ball of meat tossed into a crocodile pond.

Four companies — Sembcorp, Ostro, Mytrah and Inox — won mandates to set up 250 MW each and sell power to the public sector Power Trading Corporation, at a record low tariff of ₹3.46 a kWhr, in the country’s first auction organised by the Central government-owned Solar Energy Corporation of India. Subsequently, wind turbine manufacturer in the country wants a share of this pie.

One distinct buzz in the industry is that the Singapore-based Sembcorp’s 250 MW is very likely to go to Suzlon, following an informal arrangement made before the auction. Turbine manufacturer Inox, a BSE-listed company, will go with its own machines.

The two other companies own lands for their projects, which is rather uncommon in the wind industry. Typically, turbine companies such as Suzlon, Gamesa, Enercon, and ReGen, develop projects and sell parcels of them to wind energy companies. Therefore, a developer who owns lands has a wider choice of machine manufacturers to choose from.

While several machine-makers are vying for a share of Ostro’s and Mytrah’s orders, the leading names are GE, Vestas and Senvion, rather than the well-entrenched companies like Gamesa, Enercon and ReGen.

One industry insider observed that if Ostro or Mytrah ever wish to sell their projects to one of the global utility companies — such as Enel, EDF or Engie — having GE or Vestas machines will be an advantage over the others. Senvion, formerly known as REPower and briefly owned by Suzlon, is a new comer to the Indian market. It has arranged to use the manufacturing facilities of Kenersys, a company of the Baba Kalyani group. An anchor order of 250 MW order will enable Senvion to kick-start business in India.

Gamesa, the Indian subsidiary of the Spanish company of the same name, was rumoured to get a share of the pie at any cost. However, Ramesh Kymal, Chairman and Managing Director of Gamesa India, admitted giving such a mandate to his sales staff, but also added that he had set a price limit below which they could not sell.

Kymal feels that the tariff of ₹3.46 is “an aberration that will get corrected.” Gamesa sold 1,004 MW of turbines in 2015-16, and Kymal is “more bullish” over 2016-17. The industry expects a few positive developments. It has been assured informally by the government that the ‘generation based incentive’ scheme, which would expire this month, would continue, though perhaps in a diminished form. This incentive rides over the feed-in tariffs that electricity distribution companies (discoms) pay wind energy companies. Secondly, following the successful tariff-based auction of capacity, there will be more such bid-outs. Kymal, for one, expects the market to grow to 6,000 MW next year, from around 5,000 MW this year.

The industry has placed two more demands on the government’s table. First, freedom to produce wind energy anywhere and sell anywhere. This ‘open access’ is hampered today by a raft of charges.

Second, some subsidy support to offset logistics costs to aid exports. If the government accedes to these, as is likely, the Indian wind market would be even bigger. Some manufacturers thus prefer to wait-and-watch rather join the rush for market share.

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