India is the second wind energy market for Gamesa

Gamesa expects to reach a wind turbine output of about 700 MW in India this year, up from 400 MW in 2013.

The company’s chairman Ignacio Martin was in Chennai to launch a new production line at the company’s plant in Mamandur, near Chennai to manufacture larger G114-2.0 MW wind turbines, which are expected to be launched in 2015. He spoke about his company’s India plans with T E Narasimhan.

How do you see the Indian market for Gamesa and what are the plans for near future in the country?
The Indian market is very promising and some of the initiatives taken by the government are also very supportive, already keen on growing the sector to 10GW per annum. Considering the power shortage this is an achievable target provided the framework is conducive to investment & growth.

Gamesa has already established one of the top companies in the wind sector with a strong local manufacturing presence. We look forward to be among the leading companies in India by strengthening our manufacturing, introducing new efficient products & expanding the Wind Farm Development pipeline.

The inauguration comes on the background of India promoting Make-in-India, how do you see this campaign and what would be your contribution to it? what the Government of India should do to make the manufacturing successful?
It is the need of the hour. India has a huge current account and trade deficit and we cannot continue to import when we have the technology & resources here in India.

Gamesa as a company is committed to maximising the local content and local manufacturing. We hope with growing demand the supply chain will be much stronger and it will enable us to source more from India.

The industry also needs a certain critical mass in terms of volume to ensure that the local supply chain becomes competitive. Therefore the government initiative to scale up wind energy to about 10 GW is the right step to promoting local manufacturing.

Will the company look at using the Chennai facility for export markets? If yes what percentage it will be for export markets? Which are the country and what products?
Currently, the plants are focused to meeting local demand as India is a fast growing global market. We have exported turbines to countries like Sri Lanka. Our ocus is on meeting the growing demand locally and strengthening the supply chain. If the opportunity emerges then we shall consider exports as well.

How important India is for Gamesa and how competitive manufacturing in India is?
India is very critical to Gamesa’s future growth. India already contributes about one-fourth of our business and we see this growing in future. We are committed to having a strong & agile organisation in India to meet the demands of our clients.

Manufacturing in India also makes tremendous business sense as it enables us to be close to the market. We have a very high local content, which means the industry and supply chain has developed very rapidly in the last decade. We look forward to further strengthening the supply chain to improve our manufacturing competitiveness in the region.

How much Gamesa invested till now in India? Any plans to invest further? If yes, how much and what for?
Gamesa has made significant investment in nurturing the young Indian organisation. This was mainly in establishing the local manufacturing facilities in Chennai & Baroda. Besides this we have also supported India is building a strong Wind Farm Development pipeline as the Indian market requires Turnkey Wind farms.

We plan to invest about 100 million euros over the next five years. The key focus areas will be: Strengthen our manufacturing capabilities especially to for the launch of new products like G114-2.0 in India, develop the supply chain and increase localisation and increase our land bank to promote & develop wind farms

How much India contributes (in terms of revenue) for Gamesa’s business globally?
India contributed about 27% in the three quarters of 2014 in terms of MW sold. This has steadily increased over the past and now India is the second largest market for Gamesa globally and only next to Latin America. At the end of 2013, India accounts for 22% of total MW sold.

What are the product development activities Gamesa have which are relevant to Indian market?
Indian market needs a low wind turbine. The G97-2.0 is already one of the benchmarks for efficiency in the segment. We plan to launch the next generation G114-2.0 MW next year.

The turbine has one of the largest blades, which enable higher wind capture and hence more power. Additionally, the blade is specifically designed to maximizing generation during low winds while reducing noise. The G114 is expected to produce upto 20 per cent more energy compared to G97 depending on site conditions. This will significantly reduce the the cost of energy and also improve the utilisation of evacuation infrastructure.

Are you looking for partners to offer financial support to your clients? If so, what are the plans and current status of this?
Our core business is wind turbines and wind farms. However, if the need arises we would be happy to assist our clients in securing financing.

Currently, most of our clients are well funded. In fact the Indian market is already attracting a lot of interest from global PE & infrastructure funds.

However, there needs to be greater focus on debt financing, which is still a challenge in India. This is a larger issue which needs government attention. Some kind of government fund or dedicated financing facility would be a big boost to the sector.

What is the status of your plans to enter solar sector in India?
The solar industry very nascent but has tremendous potential. However, the sector has only a handful of companies with long experience in project development. We have an inherent expertise in Designing & Constructing Wind farms which we would like to leverage this in the solar space.