Wind turbines manufacturers are expanding their capacity in India to boost the country’s exports, even though the national industry is struggling.
India is well positioned to become a manufacturing center for the wind power industry and is emerging as an important part of the global supply chain, according to Ben Backwell, executive head of the World Wind Energy Council. “The cost of production in India is very competitive and engineering is very strong,” he said by phone. “They can beat anyone.”
Danish wind turbine manufacturer Vestas Wind Systems A / S announced earlier this month that it will establish a new gondola and hub assembly factory in India, which will be operational next year. The company hopes to increase “the export capabilities of India with the aim of making it a world center for renewable energy manufacturing.”
The wind turbine industry of the South Asian nation is experiencing difficulties receiving orders after Prime Minister Narendra Modi’s government adopted the auctions in 2017 as a preferred method for wind projects. The measure has limited orders for domestic manufacturers such as Suzlon Energy Ltd. and Inox Wind Ltd. although the nation wants to reach 175 gigawatts of installed renewable energy capacity by 2022.
While the transition to auctions has resulted in lower tariffs, the construction of this new capacity has faced difficulties in acquiring land and accessing the network. India has installed less than 2 gigawatts of wind projects annually in the last two years, leaving most of its 13.5 gigawatts of manufacturing capacity unused.
If the current internal installation rate continues beyond 2021, Indian industry would have serious problems, according to D.V. Giri, general secretary of the Wind Turbine Manufacturers Association of India.
But the country’s solid supply network could be attracting foreign companies looking to send wind power equipment to international markets.
“India has become very competitive from an export perspective,” said Amit Kansal, managing director of the Indian unit of the German group Senvion SA, which plans to expand existing facilities in the western state of Maharashtra and has obtained an export license for wind blades. “Almost 90% of the supply chain is available in India, from gearboxes to generators, shovels, towers, etc.”
The competition of international turbine manufacturers will progressively capture market share of national manufacturers and these will have to adapt, according to Anish De, national head of energy and natural resources of India at the consulting firm KPMG.
Suzlon Energy failed to pay a principal of US $ 172 million bonds that expired in July, because the low level of demand used up its cash. Its competitor Inox Wind Ltd. has recorded losses in the last two financial years.
“The disruption after 20 years of the old model has changed the rules of the game” and local manufacturers have lost the advantage, said De.
Anindya Upadhyay, Bloomberg