INDIA: There are changes afoot in the Indian turbine sector as the country's industry shifts away from the turnkey model it has historically used.
Indian project owners have tended to buy finished wind farms. These owners range from small businesses to large public-sector organisations and some of the country's large independent power producers.
Under the turnkey concept of project development, the turbine manufacturer offers a ready-made project to investors. This requires the manufacturer to be involved in all aspects of development, from land prospecting, acquisition and development, to wind-resource monitoring, supply, construction and commissioning and, finally, operation and maintenance support.
However, this is beginning to change with the growth of pure renewables developers and independent power producers backed by private equity. Cost is all important in India - some estimate the country's cost of energy is even lower than China's. For these developers, taking control of project procurement is an easy way to keep costs down.
This is also changing the dynamics of the market and bringing into play new suppliers who are looking to sell turbines rather than develop projects.
"There is a new game in town," said Hiren Shah, CEO of Reliance Ming Yang, a joint venture between Chinese turbine maker Ming Yang and Indian conglomerate Reliance Group. "GE has become very active and is doing well. This is because GE never wanted to do the turnkey model. Now customers are looking to do it all themselves, so they just want to buy the turbine.
According to Shah, others doing well in the industry include Gamesa and Suzlon, although both of these also offer a turnkey service. Another major European manufacturer was struggling because its turbines were too expensive, he added.
Gamesa was the top manufacturer in India in 2014, taking a 32% market share, according to Make Consulting. GE came sixth. To illustrate the move away from the turnkey model, Gamesa was awarded six contracts worth a combined 194MW in April — only two of these were for turnkey projects.
It is also worth noting that GE and Gamesa have both brought out turbines for the Indian market in the last year. GE launched the 1.7-103, based on its 1.7-100 turbine and suitable for low-wind conditions. Gamesa has a new variant of the G97 with a 104-metre tower height, designed for low-wind speed sites in India.
But in the view of those familiar with the Indian market, the shift away from turnkey is down to local manufacturer Suzlon's financial issues prior to the sale of Senvion. Lack of access to funds meant Suzlon was unable to secure project financing to build the projects. It is capital intensive to develop a project from beginning to end. And it is expensive to borrow money in the Indian market.
Overall, this may have had an impact on wind development in India as the company owns a land bank of prospective wind sites.
Manufacturers in India also face the problem of oversupply, which has made turbine purchasing a buyer's market. Shah estimated overcapacity to be as high as 50%.
Despite these possible issues, India is likely to be a major growth market in the region. Make Consulting partner Steen Broust Nielsen backed this up. "We see the Indian market as a growth market. It has a strong economy moving forward and is still an energy-demand market," he said.
"It has high growth in electricity consumption and attractive government targets, supported by obligations on state level to implement renewable-power generation, generation-based incentives (GBI) and accelerated depreciation (AD), which has been re-introduced."
But India is not without issues. Shah referred to its wind industry as "nomads moving from one state to another", thanks to government policy promoting wind. Currently, Maharashtra is the place to be.
The system is not as efficient as it should be, said Nielsen. "India has not been so successful in meeting its targets in the past," he said. "A more diligent enforcement of state obligations, overhaul and improvement of interstate renewables certificate and power trading are key prerequisites for reaching targets."
Another potential area for upheaval is operations and maintenance (O & M). Currently, all turbine owners are tied into O&M deals with the manufacturer and there are no third-party alternatives.
However, if India resolved its problems, said Make, especially with regard to targets, it would do well. The turbine market may bring in new manufacturers, but Nielsen said: "I expect turnkey will continue to be an important part of the market."
Business Deals Signed During PM Modi's China Visit
Indian and Chinese companies signed deals worth $22 billion in Shanghai on Saturday, soon after Prime Minister Narendra Modi made a strong pitch for the two countries to work together in an address to the India-China Business Forum. External Affairs Ministry spokesperson Vikas Swarup in a tweet shared an official document containing details of the agreements signed between Indian and Chinese companies, spanning industries including renewable energy, power infrastructure and steel.
Here's a list of the pacts signed:
1. Axis Energy Ventures India signed a tripartite MoU in the renewable energy sector with Chinese companies Mingyang Wind Power and Global Wind Power.
2. Essel Solar signed a pact with China's JA Solar to set up a solar cell and module manufacturing facility.
3. Wipro BPS's pact with Dalian Municipal People's Government and Yida China Holding was for an offshore delivery centre in Dalian.
4. Bharti Airtel signed agreements with China Development Bank for financing for the purchase of equipment from ZTE and Huawei, and that under licence approved by the Telecom Regulatory Authority of India.
5. The Indian telecom operator also signed a credit facility deal with Industrial & Commercial Bank of China.
6. Adani Group signed an agreement to establish an integrated PV industrial park in Mundra SEZ with China's Golden Concord Holdings.
7. Adani Power signed with China Development Bank a pact on financing of APL Mundra Power Plant Phase I, II and III.
8. Adani Ports and SEZ signed a pact with Guangzhou Port Authority for establishment of a sister port relationship between Mundra Port and Guangzhou Port.
9. Jindal Steel and Power signed an agreement with the Industrial & Commercial Bank of China for development of potential projects.
10. Sun Group signed an MoU with Canadian Solar Power China to generage 5,000 MW of solar power in the next five years as well as manufacturing of solar modules.
11. GMR Group signed with Guizhou International Investment Corporation an MoU on an industrial park in Kakinanda SEZ for high-end Chine equipment manufacturers.
12. Infosys Technologies (China) signed an agreement with People's Government of Qiannan Autonomous Prefecture to jointly build 'China-India Information Service Corridor' in Qiannan Autonomous Prefecture.
13. IL&FS or Infrastructure Leasing & Financial Services signed an MoU with Industrial & Commercial Bank of China.
14. IL&FS also signed a deal with China Huaneng Group.
15. Welspun Group signed a deal with China National Technical Import and Export Corporation (CNTIC) for an integrated steel project in Gujarat.
16. Welspun Energy signed a memorandum of understanding (MoU) with China's Trina Solar to jointly set up a photovoltaic industry park for production of 500 MW of photovoltaic cell and 500 MW of photovoltaic solar module in India.
17. Autolite India signed a deal with Jinway Import & Export for manufacturing of high-tech capital goods in India.
18. Bhushan Power and Steel signed a deal with CNTIC for a hot-rolled steel coil project.
19. Eros Group signed an MoU with Shanghai Film Corporation for mutual development and exploration in opportunities in Indian and Chinese film markets.
20. Eros Group also signed a pact with China Film Group for co-production of film Xuan Zang.
21. NIIT China signed an MoU with Gui'an New Administrative Committee, Guizhou province for cooperation in the IT sector.
22. The Confederation of Indian Industry (CII) signed a pact with People's Government of Guizhou for promoting Indian companies participating in IT projects.
23. The industry chamber also signed a pact with Zhisland & Xifu for connecting Indian and Chinese private sector companies.
24. Aarvee Associates Architects Engineers & Consultants signed a partnership agreement with China Railway SIYUAN Survey & Design Group.
Is the industry still pushing to advance technology?
WORLDWIDE: The global financial crisis has done less damage to research and development in the wind sector than complacency in the booming years that preceded it. And a tendency to update proven technology works in the sector's favour, particularly when budgets are tight.
When the worldwide economic crisis started in 2008, the global wind sector was booming and many leading wind-turbine and component suppliers had order books that were full to bursting. Thanks to the industry's long lead times, particularly in offshore, the negative effects were initially limited. Now, however, just over five years later, the impact in wind is still being felt.
During a boom, anything produced can be sold easily to any number of eager buyers, so the push to develop new products is not at its strongest. There are indeed indications of some wind-turbine suppliers having slowed down research and development (R&D) efforts during the easy period stretching from about 2007 into as late as 2010 - two years after the economic crash - before stepping them up again.
But an evaluation of the impact of a lull in R&D in the wind industry needs to take into account the subsidy cuts that have been taking place in many countries. Market challenges tend to bring fresh solutions through new approaches, so while a drop in R&D work may negatively affect product developments in the short term, the market continues to prove that tighter R&D budgets do not necessarily produce poorer results, nor do they jeopardise turbine bankability demands.
Take, for example, the emergence of dedicated low-wind turbines with supersize rotors and high towers for maximum wind capture. These designs - first announced in 2010, when wind was just coming out of its boom period - could effectively counteract some of the subsidy cuts in markets with average wind conditions and compensate for the near absence of any support mechanism in markets such as Brazil.
These low-wind turbines came at a time suitable for Germany's ambitious energy transition programme, launched in 2011. They opened up new potential for building projects in low-wind inland sites, especially when accompanied by new concrete-steel hybrid or other towers with hub heights as tall as 150 metres.
Evolutionary advances versus radical design
Low-wind development was largely built on previous wind technology, adding key innovations that focused on the new-generation long, slender blades and advanced load control. Such additions of innovative product features to previous designs is an ongoing trend in the wind industry, requiring less time for R&D than a full redesign, and cutting risk and cost. The new 3MW onshore volume class has seen evolutionary advances of already proven, smaller-size turbine platforms. Tower advances for low-wind sites have also been largely incremental, although there have been major new designs such as the bolted shell steel tower developed by Siemens and Ib Andresen Industri.
While the risks of incremental developments are often significantly lower, long-term advancement of technology also requires radical innovative designs. Higher initial overall risks and costs can be expected, but the developers and investors can also expect superior, longer-term overall gains.
Siemens took a bold move in 2009 when it introduced a novel lightweight 3MW direct-drive turbine with an in-house developed permanent-magnet generator (PMG), supplementing its proven 2.3MW and 3.6MW geared volume turbine range. The 3MW turbine served as a technology blueprint for a much larger 6MW offshore sister model, which was introduced only two years later - another R&D achievement.
This move contrasts with most turbine suppliers' strategy, which - regardless of market conditions - is to amend and adapt the technology they know best.
Enercon continuously refines its direct-drive turbine technology, for example offering generators with either air or liquid cooling. It introduced next-generation slender rotor blades in 2012 and a year later added slender segmented blades. The production-automation technology for these was also developed in-house, another major R&D achievement.
For offshore applications, modest product development with a focus on reliability and creating a solid track record is key. Most offshore turbines remain based on the small number of 3.6-5MW models first introduced in 2004. Their successor models entered the market from about 2009 and have gradually taken over - the Siemens 3.6MW turbine is the key example.
The most recent second-generation 6-8MW offshore turbines will gradually reinforce these ranks, starting this year, and will feature a wider variety in drivetrain solutions, including direct-drive and medium-speed. Compared with the first models, they generally feature a more favourable head mass and/or a larger rotor-swept area per installed megawatt - borne out of gradual evolution of the original design and a parallel primary goal to drive down cost of energy.
That is not to say that radical designs are out of the picture. Two 10MW class vertical-axis turbine designs, the Aerogenerator X and VertAx Wind, have been under development since 2009 but have not reached the prototype stage yet.
That is not to say that radical designs are out of the picture. Two 10MW class vertical-axis turbine designs, the Aerogenerator X and VertAx Wind, have been under development since 2009 but have not reached the prototype stage yet.
A rather radical 6MW two-bladed Aerodyn SCD 6.0 downwind turbine developed from 2011 for hurricane-prone offshore conditions has prototype installation planned in the next few months. Aerodyn's initial 3MW SCD 3.0 two-bladed machine, which started developing in 2009, has a small series operating in China, where the technology is licensed by Ming Yang.
Dutch engineering consultancy Mecal specialises in turbine design and has first-hand experience of demand for R&D. Business developer Frans Brughuis agrees there has been a slowdown recently. "During the past year, our big Asian clients were holding back on placing orders for turbine projects, partly for financial reasons, and, in China, also due to the fact that there were simply too many suppliers in the market," he says. But Brughuis believes the market for turbine development is picking up, both in Korea and China, and more recently for the established European suppliers.
EFFECTIVE SPENDING INNOVATIONS FAIL TO LOWER THE LEVELISED COSTS, FINDS JAMES QUILTER
On the face of it, and despite the global recession, the wind sector has seen plenty of innovation in recent years. Several manufacturers are completing testing of 6MW-plus offshore turbines, while onshore low-wind machines continue to advance.
Yet the view is rather different when looking at the levelised cost of energy (LCOE) for wind power, which has changed little recently. Levelised cost is a lifetime average cost per MWh including capital, finance, operating costs and expected generation.
In the years until 2005, with explosive growth and industrialisation, falling cost of wind energy was constant. Then, rising commodity prices and high demand led to the cost of energy actually rising for two years. Wind costs began falling again around 2008, but has never picked up the momentum of former years and has now fallen behind other forms of renewable energy.
This is highlighted by research analyst Lazard, which found that 2012 LCEO figures for wind of $48 (low) - $95 (high)/MWh fell in 2013 by a mere $3 for the low figure, with no drop in the high figure. Offshore's LCOE was static at $155/MWh. Yet, photovoltaic's 2012 figure of $102-$142/MWh dropped to $64-$89/MWh in 2013.
Hiren Shah, CEO of Indian wind turbine manufacturer Global Wind Power, which licenses designs and builds machines for the Indian market, says that larger rotors and targeting of low-wind sites were responsible for the LCOE fall in recent years.
But this is a relatively short term gain and is unlikely to drive the industry forward. He says: "There are limits to how large you can design a rotor. I have a 1.5MW machine with a 89-metre rotor. But with the 1.5MW you can't go to 100 metres, if you want that you have to go for a 2MW turbine.
"With 2MW, people are selling 103-110-metre rotors. You can maybe get to 114 but then you get to 2.5MW. There has been a huge jump in blade sizes over the last few years but now it has become more incremental."
There is one last sign that technological growth in the wind sector may be slowing down. According to the latest figures from the Clean Energy Patent Growth Index, wind energy patent applications for the third quarter of 2013 fell by 21% compared with the same period in 2012, and 5% compared with the previous quarter.
In all, there were 146 wind patent applications, 51 fewer than the most popular clean energy patent category, fuel cells.
With governments demanding a reduction in costs, responsibility falls to the manufacturers to meet this. There is arguably little point in developing turbines with giant blades, innovative towers and record-breaking generating capacity, if the cost of energy is not reduced.
Chinese collaboration to help GWPL reposition itself
With the formalisation of its partnership with the China Ming Yang Power (CMYP) Group, Global Wind Power Ltd (GWPL) took a concrete step towards reviving business growth. In end 2012, the CMYP Group, a leading private manufacturer of wind turbines in China, acquired a major stake in GWPL, a Reliance Anil Dhirubhai Ambani Group (ADAG)- promoted company, through its subsidary Ming Yang Holdings (Singapore) Pte Limited. Following the stake sale, GWPL now operates as a subsidary of the Chinese company without having had to rebrand itself.
The acquisition is likely to improve GWPL's market position in India both in terms of its product offerings and its cost of setting up projects. The company has been able to set up only 200 MW of wind power capacity since its establishment in 2008 because it has not been able to compete with other large turnkey contractors on cost and time parameters. Of this 45 MW was installed in Maharastra in 2013 itself.
The partnership with CMYP will eliminate the need for acquiring foriegn licences for wind turbine technology, which is not only costly but also time-consuming. Further, GWPL will gain long-term access to Chinese expertise in turbine technology, engineering as well as research and development (R&D). This will allow the company to focus on its core business of manufacturing, servicing and selling turbines. "Most Indian companies do not have strong R&D capabilities in place for wind turbines. It is, therefore, more appropriate to source technology from a company like CMYP, which has an established product portfolio and a long-term plan in place. As CMYP evolves in terms of technology, so will GWPL, "says Hiren Shah, Chief Executive Officer, GWPL.
For CMYP, the equity stake in GWPL will give it access to a large wind power market in India. In order to tap this market, the Chinese company has also signed an MoU with Reliance Power to co-develop 2,500 MW of renewable energy projects.
GWPL is currently promoting CMYP's 1.5 MW series of wind turbines in the country. The turbine is available in two versions - one with a rotor diameter of 77 metres and the other with a rotor diameter of 89 metres. The Centre for Wind Energy Technology (C-WET) has recently granted approval for the sale of the 77 metre rotor diameter turbine in India. GWPL, however, expects to achieve greater sucess with the other turbine version, which is likely to receive C-WET certification by mid-2014. The company has already received product enquiries and has confirmed at least 150 MW of orders of these turbines.
Operations and Performance
Reliance ADAG entered the wind power equipment manufacturing space in 2008 with the intention of the group becoming a captive user of this equipment. GWPL was eastablished for manufacturing and supplying wind turbine generators (WTGs), besides providing turnkey solutions and services like wind resource assessment, site acquisition, infrastructure development, erection and commissioning of turbines and long-term operations and maintenance for projects.
With regard to technology, the company had to depend on licensed and certified designs from abroad. Prior to its colloboration with CMYP, GWPL had signed technology transfer agreements with three European companies. It had acquired a license for a 750 kW fixed speed active stall-regulated turbine from Denmark based Norwin Wind Turbine Technologies. The turbine, which has a rotor diameter of 47 metres, was renamed GWP 47-750 kW for distribution in India. Apart from this, the company has been selling the GWP82-2000 kW turbine, which is a direct drive wind turbine designed by Dutch engineering consultancy Lagerwey Wind. Further, Germany-based Fuhrlander had issued a license to the company for the GWP 100-2500 kW asynchronous machine. The variable speed turbine model was originally designed by another German company, W2E Wind to Energy GmbH.
GWPL has been actively promoting at least two of these products in the Indian market. However, the market for the 750 kW turbine shrank considerably with the removal of the accelerated depreciation (AD) benefits in March 2012. Increasing participation by independent power producers (IPPs) also contributed to the low demand as IPPs lend to focus more on increasing operational efficiencies by opting for multi-MW scale turbines. Going forward, the company is likely to be more involved in the sale of CMYP's turbines. However, these technical agreements will continue to be in place and will be unaffected by stake sale.
GWPL's product portfolio in India
Rated Power (kW)
Rotor diameter (metres)
Hub height (metres)
Asynchronous machine, variable speed, electrical pitch system, indirect converter with DC voltage intermediate
80,105,120+ hybrid tower
Direct drive gearless, variable speed, variable pitch, full power converter
35 (minimum), 65 (maximum)
Conventional drive train with main shaft, active stall regulation, thyristor controlled
Mingyang 1.5MW HH 75 m TC II A
Designed for anti-typhoon. Makes use of doubly fed induction generators, variable speed electrical pitch system, long main shaft and two main bearings designed to avoid axis vibration into the gearbox
Mingyang 1.5MW HH 80 m TC S*
Long blade length designed for low wind speed zone, based on the mature technology of MY1.5/77-75; optimised control algorithm to generate as much energy as possible to achieve low cost per kWh
*Yet to be certified by C-WET for sale in India
Sources : GWPL; C-WET
With regard to GWPL's manufacturing capabilities, it has nacelles and tower production units in Silvassa in Dadra & Nagar Haveli that can cater to about 600 MW of wind turbines per annum. However, the actual utilisation of the company's nacelle manufacturing capacity has been low, especially since the withdrawal of AD benefits. Moreover, the 2.5 MW turbine, which the company started marketing in 2010, may not be suitable for all sites. Therefore, the company made a strategic move and started supplying its towers to other WTG manufactures, rather than keeping the tower manufacturing facility idle. However, the demand for towers is not enough to allow the company to operate its facility at full capacity. This is due to the fact that some turnkey contractors in India have set up their own tower manufacturing units and it is only when there is a logistical advantage that a contractor is likely to source towers from GWPL.
GWPL is now in the process of augumenting its manufacturing facilities to be able to cater to the demand for towers and nacelles required for CMYP's WTGs. "The manufacturing facilities will be able to produce all classes of turbines, including CMYP's recent models, by 2014," says Shah. Over time GWPL plans to indigenise its manufacturing process, a move that will be funded through a combination of equity, debt and profit earnings.
In line with the industry norm, only about 20 per cent of the company's revenues come from engineering, procurement and construction (EPC) services; the rest are earned from manufacturing services. However, the ratio may vary slightly from state to state. For instance, in Maharastra it is estimated to be about 75:25 as the EPC cost in the sate is higher, while in Tamil Nadu it is estimated to be about 78:22.
Project Pipeline and outlook
Immediately after the launch of its operations, GWPL witnessed a slump. However, in the past two years, the company has been making concerted efforts to restructure its business model and reposition itself as a cost-effective solutions provider. Under its previous model, the company paid for the technology; however, now, GWPL has received an equity infusion to access the technology and will receive operational support from CMYP. Shah believes that the company now has better future visibility for both its EPC and manufacturing operations. GWPL's manufacturing facilities are likely to have a capacity utilisation factor of 40 per cent by 2014. Further GWPL's firm order book currently stands at 150 MW and orders totalling 500 MW are expected in the near future. Of this, at least 100 MW is likely to be executed in 2014.
While GWPL's progress in the Indian wind power market has been slow so far, the situation is expected to improve going forward. Future growth will depend on its ability to leverage CMYP's cost effective strategies to tap the price-sensitive Indian market. Although it is too early to predict the extent to which GWPL will benefit from the Chinese collaboration, its order book is sure to improve. Depending on the success of this collaboration, GWPL may also export CMYP's turbine in the long term.
Ming Yang Wins First 150-Megawatt Turbine Order in India
China Ming Yang Wind Power Group Ltd. (MY) won a 150-megawatt order in India after becoming the first Chinese turbine maker to receive approval to sell machines in Asia's second-biggest wind market as sales slow at home.
The project by an undisclosed developer in Maharashtra state will use 1.5-megawatt turbines, Hiren Shah, chief executive officer of Ming Yang's local unit, Global Wind Power Ltd., said in an interview from Mumbai. The machine was approved for sale by the government-run Centre for Wind Energy Technology in October.
Chinese manufacturers such as Ming Yang, Sinovel Wind Group (601558) Co. and Xinjiang Goldwind Science & Technology Co. are seeking to diversify beyond their home market. At least 88 percent of their sales in 2012 came from China, where wind installations contracted 42 percent in the first half of this year, according to data compiled by Bloomberg.
In contrast, India is forecast to install 2,050 megawatts of wind capacity in 2013, surpassing the U.S. for the first time to become the world's third-biggest market, according to Bloomberg New Energy Finance.
Global Wind, a venture between Ming Yang and billionaire Anil Ambani's Reliance Capital Ltd. (RCAPT), expects to get Indian approval to sell a second 1.5-megawatt turbine around mid-2014.
Ming Yang's newer machines are able to generate more power from lower wind speeds, making them attractive to Indian wind-farm developers who are increasingly choosing turbines based on their efficiency rather than price, Shah said.
"The customer is educated enough now, so they're not thinking about cost per megawatt," Shah said. "They're thinking about the cost per unit of electricity generated."
The biggest obstacle developers in India face is "the cost and availability of finance" with local lending rates at about 12 percent, Shah said. Purchasing Ming Yang turbines may make developers eligible for funding from Chinese banks, he said.
China Development Bank Corp. struck an agreement with Ming Yang and Reliance last year to lend as much as $3 billion for 2,500 megawatts of projects in India. Global Wind also has a preliminary agreement with the Industrial & Commercial Bank of China Ltd. for export finance, Shah said.
Global Wind is assembling turbines from mostly imported components at a facility in Silvassa, about 160 kilometers (100 miles) north of Mumbai. It also makes the biggest turbine available in India -- a 2.5-megawatt machine based on Fuhrlander AG technology that was used to build a 45-megawatt wind farm in April for Reliance Power Ltd. (RPWR), said Shah.
Global Wind Power Ltd., backed by billionaire Anil Ambani, sees approval this year to sell a new turbine in India from China Ming Yang Wind Power Group.
Global Wind, a venture between Ambani's Reliance Capital Ltd. (RCAPT) and Ming Yang, will submit the 1.5-megawatt machine to the Centre for Wind Energy Technology next month with approval seen about a month later, Chief Executive Officer Hiren Shah said in an interview. The center vets turbine models for use in India.
Chinese producers such as Sinovel Wind Group (601558) Co., Dongfang Electric Corp. and Shanghai Electric Group Co. (601727) have won Indian orders to diversify out of an oversupplied home market. Global Wind, which assembles turbines in India from Ming Yang parts, will seek approval for a second 1.5-megawatt machine by May.
The arrangement with Ming Yang may allow Global Wind to tap Chinese lenders for export finance for the construction of wind farms in India, where developers' borrowing costs can be as high as 15 percent, Shah said in a presentation in Delhi.
Turbines make up 80 percent of building costs. Funding projects with foreign loans, even after currency hedging, may lower borrowing costs to as low as 7 percent, Shah said.
Ming Yang and Ambani's Reliance Anil Dhirubhai Ambani Group Ltd. announced an agreement last year to develop as much as 2,500 megawatts of wind capacity in India by 2015. In November, China Development Bank Corp. said it may lend as much as $3 billion to the companies after assessing their plans.
"More than the cost, the important parameter is the return on investment"
By Mr. Hiren Shah, CEO, Global Wind Power Ltd. (GWPL), Friday, 12 July 2013 13:02
Global Wind Power Ltd. (GWPL) is an integrated wind turbine turnkey solutions provider having strengths -
1. Manufacturing of critical components (towers/generators)
2. Wind turbine manufacturing and assembly
3. Project development (land/regulatory approvals and infrastructure solutions)
4. Operation and maintenance of turbines
GWPL is a joint venture between
Reliance ADAG Group
Reliance Group is amongst India's leading business houses with over 230 million customers. It has a strong presence across a wide array of high growth consumer-facing businesses of telecom, energy, power, infrastructure, financial services and media and entertainment. The Group currently has a net worth in excess of Rs. 89,000 crore (US$ 19.7 billion), cash flows of Rs. 10,900 crore (US$ 2.3 billion) and net profit of Rs. 3,600 crore (US$ 0.8 billion).
China Ming Yang Wind Power Group Limited
China Ming Yang Wind Power Group Limited (NYSE: MY) is a leading and fast-growing wind turbine manufacturer in China, focusing on designing, manufacturing, selling and servicing megawatt-class wind turbines. Ming Yang produces advanced, highly adaptable wind turbines with high energy output and provides customers with comprehensive post-sales services. Ming Yang cooperates with aerodyne Energiesysteme, one of the world's leading wind turbine design firms based in Germany, to co-develop wind turbines. In terms of newly installed capacity, Ming Yang was a top 10 wind turbine manufacturer worldwide and the largest non-state owned wind turbine manufacturer in China in 2011.
For further information, please visit the Company's website: http://ir.mywind.com.cn.
Q2. How would you define the first quarter in terms your company's performance in India?
We have just finished with our joint venture with China M Y P G L and are in the process of getting our technologies transferred
Q3. Tell us more about the Indo Chinese collaboration?
Wind energy eco-system in India comprises of the above mentioned key segments
In India ,wind turbine manufacturers are turnkey solution providers who undertake the role of WTG manufacturer, wind farm developer as well as O & M
Players who have a presence across the entire value chain can provide seamless solutions and considerably remove the bottle necks and risk in the ecosystem
GWPL has established manufacturing, execution and operation Management capabilities & MY brings with it strengths in technology, finance & research development.
Backing of Reliance group that is Reliance power as potential power producer and Reliance Infra as distributing agent makes the total collaboration a win win project.
Q4. How does your order book stand for the current financial year? What are your growth strategies amidst this slowdown?
We have a strong order book and are very optimistic about capturing market share beginning next year.
Q5. With the current glut of turbines in the market and lack of subsidies, do you think the cost/MW could come down in the near future?
There is policy support in place. These include preferential tarrifs, RPO, and REC. Additionally there is allowance of FDI in wind projects , allocation of Forest Land for Wind Projects, Concessional Duty for imports of components and Excise duty exemption. Policies such as Generation Based Incentives would reinforce the case for investment in wind project even further . So we are expecting robust growth
Rather than cost/MW, the cost/MWH or in other words, the cost of energy generation is the relevant metric. Further, more than the cost, the important parameter is the return on investment for the owners of such assets. And that is improving while the risk for the same is reducing
Q6. Could you tell us a bit more about your turbine offerings in India? Any new product launches that we can expect?
We will be soon launching MY 1.5MW turbine with an 89 meter rotor which we expect to be the best in its class.
Q7. The emerging markets look good for new wind project capacities. Do you any plans to use your Indian facilities as an export hub for these markets?
Yes, we do. But first we will focus on the domestic market.
Q8. Finally, how do you describe the road ahead for Global Wind Power in India?
In addition to providing a quality turbine, we recognize the importance of financing. Concurrent with the shift from accelerated depreciation based customers to IPPs, is also a subsequent shift from recourse based to non-recourse based financing which the lending institutions are still coming to grips with. With strong profit making balance sheets unavailable to serve as parent company guarantees, the availability of financing to project companies set up by IPPs is going to the most important factor in driving the growth of the industry
We are actively driving the concept of pre-packaged financing at competitive rates. This facilitates the IPPs to extend their equity further and drive up their return on equity while eliminating the bottleneck related to financing
About Mr. Hiren Shah:
Hiren Shah is the CEO of Global Wind Power Ltd (GWPL), a joint venture between Reliance ADAG and Ming Yang. GWPL is a manufacturer of wind turbines and provides end-to-end turnkey wind power solutions and services. Prior to that he was the founder and CEO of B2B-Matrix, a software company in California, that provided solutions to streamline Engineering, Procurement and Sales processes, which was acquired by Samsung.
Hiren holds a Masters in Business Administration from the University of Chicago Booth School of Business. He also has a Masters in Computer Engineering and a Bachelors in Electrical Engineering from Michigan Tech. He has been a speaker and panelist at a number of Renewable Energy conferences and has undertaken executive education coursework at Harvard Business School.
The company has a total installed capacity of around 150 MW
We have about 200 MW projects in the pipe line and working on around 45 MW project in Maharashtra with the largest turbine in India, avers Hiren Shah, CEO, Global Wind Power in an interaction with Eliza Waghmare....
India is the third largest wind energy market in the world. How well equipped is GWP when it comes to tapping into emerging opportunities?
We have seen the shift in the Indian market since the appreciation from customers to IPP (Independent Power Producer). IPPs evaluation is a little different. They work towards acquiring quality products and focus on various operations as a criterion. Global Wind Power (GWP) has tied up with a strategic investor from China that will enter India in order to bring in their technology, which will then be able to address the requirements for an excellent quality product. But at the same time, this agreement should be able to meet the internal rate of return requirements of our independent power producers.
Do you think that there is a lesser inclination by the Indian government especially with regard to approving conventional energy projectsrather than non-conventional?
I disagree with the contention that the government is not doing nearly enough. As a matter of fact, India has the best policies in terms of government support for energy sector. Our country has the renewable purchase obligation; the renewable energy certification; and a very good tariff structure in place. In a state like Maharashtra, where the tariff is Rs 5.67 paisa, there is a possibility that a generation based incentive shall be reinstated within two or three months.
The ministries in general have depicted a strong drive and capability. They have ministers that are actually proactive and champion causes that deserve merit. Considering these factors I do not think that government is not doing nearly enough. However there is certainly room for improvement.
When compared to other wind turbines in the Indian market, what advantages do GWP turbines provide to its customers?
When we consider advantages, one thing that no Indian turbine manufacturer does today is that financing. Since we do provide financing it is one of our strongest selling points in the Indian market. We not only provide a turnkey model and other pre-requisites but also go one step further and provide financing for our customers from the China Development Bank, China Exim Bank. This makes what we offer as being a very compelling proposition
What is your total installed capacity so far? Brief us about the company's upcoming projects?
The company has a total installed capacity of about 150 mega watts (MW).We have projects that would amount to 200 MW in the pipeline. Currently, we are working on a 45 MW project in Maharashtra with the largest turbine in India. It's a 2.5 MW machine. Apart from India, do you have any wind power projects in abroad? Please elaborate? We have erected one project, one turbine in Scotland and this turbine is running very well. GWP have also recently erected a turbine in US, which is running fine.
What challenges do you face while working on various projects? How do you try to overcome them?
There is a persistent challenge in every stage right from the availability of the land; the substation; the assembling of the machines; the logistics; project erection; etc. If any of these duties aren't executed effectively, the project doesn't turn out to be successful. We have challenges across every sector. So, in all, the major challenge is to circumvent these obstacles so that the project isn't delayed.
What are your expectations from the upcoming budget for the wind energy sector? Is there a dramatic increase in market competition, with other companies entering the wind energy market in India?
With regard to the budget, the Ministry of New and Renewable Energy (MNRE) has made already put forth the necessary recommendations one various policies.
One of the key policies is the Generation Based Incentive (GBI). The ministry has proposed that all Independent Power Producers (IPP) will get an extra 50 to 80 paisa per unit of energy generated.
It's a very good proposal, but the MNRE doesn't have the money to make this available to all the power producers. So, the money has to come from some other ministry like the Finance Ministry or the Power Ministry, etc. Somebody has to figure out how to budget for these incentives that are already proposed by the MNRE. So my hope is that, this money which is allocated or accounted for, can be made available to the independent power producers. It helps them improve the rate of return.
Could you take us through the company's vision and future plans for the next five years?
We expect to be a dominant player. In fact, GWP is among the few companies that will, or one of the only companies today that is able to afford a turnkey project along with financing. We have already initiated the installation of a specific number of projects in India. But many are yet to be implemented since most of the projects don't have the necessary financing in place. And even if the finance is in place, in India the cost of financing is also an expensive proposition. With regard to the interest rates for wind turbine, one has to pay at least 12to 13 per cent. Whereas, GWP are financing at much lower interest rates. Thus, this provides customers with a means to accelerate their wind projects since through us the cost of financing is drastically reduced. Hence we are very optimistic and bullish about future since as organisations have something that nobody else can offer. But more importantly, we have something that the independent power producers have been looking for a long time because they spend a lot of time evaluating the right vendor, who to buy the wind turbines from and then they spend a lot of time arranging the finance for it. In fact we are having a very ambitious project for the next three years. So we want to be one of the top three players in the country.
According to you how was the year 2012 in terms of economic growth, reforms, policy formation etc as well as what are your expectations from the year 2013? Do you expect it to be largely positive?
The year 2012 was a very slow year for the company, not due to lack of policy and reforms, or economic growth, etc. It was mostly because we were working on getting the right product in the market. We are extremely optimistic about the year 2013. And we expect this year to be extremely positive.