Indian Wind energy market a potential 18 GW windfall for SimensGamesa, Suzlon and Vestas
The wind energy has seen a lot of consolidation and operational pain and it looks like they will gain from the renewed focus on policy and making it an international manufacturing hub for wind turbines.
After a subdued phase that saw deep pain for the Wind turbine OEMs, the sector seems to be a path of recovery. The government’s ambitious target of 60GW of wind energy installations was stalled due to state-level policy challenges and land acquisition delays. The transition from feed-in tariff to auction regime has led to crashing tariffs and rendered many RE projects unviable.
The wind power installations as per MNRE numbers paint a very bleak picture and make the 60GW by 2022 daunting. Wind power installations rose to 2.07 GW in the financial year (FY) 2019–20, compared to 1.58 GW in the FY 2018–19.
The total installations collectively stand at 37.69 GW which means the government has to do 23 GW in the next 2 years to meet the targets.
According to a report by Fitch Macro Research solutions report projected India is likely to install 54.7 GW of wind capacity by 2022 against the 60-GW target set by the government, Fitch Solutions Macro Research has said in a report
But the Ministry of New and Renewable Energy continues to be optimistic about its target and has taken cognizance of the same and is coming out with a series of policy changes to inject momentum in wind installations. Gujurat power minister recently said the state will soon come out with a land pocket of 30GW for wind and solar in the Kutch district which makes project deployment much easier.
The growth in cheap solar equipment imported from China also caused the prioritization of solar projects with limited local manufacturing capacity. With the Prime Minister’s clarion call for Self-reliant, Aatmanirbhar Bharat wind energy will step up as it has a well-developed ecosystem and about 90% indigenous manufacturing.
The domestic solar industry has conventionally relied on cheaper imports from China and with the recent imposition of 20% import tariff on solar equipment can force power generators and OEMs to kickstart local manufacturing and cause short term pain and slow down in solar that can in turn help the wind sector.
Wind energy has undergone consolidation in the last few years with the top 3 players commanding 65% market share. In FY 19–20 saw SiemensGamesa taking the lead from Suzlon which was under severe financial stress and scaled-down operations due to debt restructuring. According to the BloombergNEF report, the SimensGamesa market share was an impressive 30%, Suzlon who had a more than 30% market share was in the second position with 19% and Vestas at 15%.
According to industry experts, the 20GW expedited wind energy projects will be consolidated among the leading OEMs SiemensGamesa, Suzlon, and Vestas who have the capacity and local manufacturing. Suzlon the pioneer in Indian wind energy will have an edge with complete local manufacturing and products suited for Indian markets, its wind turbine S140 is the largest turbine in India with a capacity of 3MW which is suited for lower tariff regime.
With the renewed focus and the goals to decarbonize the economy will the wind energy OEMs be rewarded for their resilience and patience only time will tell.