India’s 39% Plunge in Wind Installations May Spur Mergers

October 17, 2012 by  
Filed under Green Energy News

Wind-turbine suppliers in India may
be forced to consolidate amid increasing competition after a
policy vacuum prompted a 39 percent plunge in installations in
the first half of the financial year.

In the six months ended Sept. 30, turbine makers including
Suzlon Energy Ltd. (SUEL) and Vestas Wind Systems A/S (VWS) installed 851
megawatts of wind capacity, down from 1,403 megawatts the
previous year, according to provisional numbers from the Indian
Wind Turbine Manufacturers’ Association in Chennai.

Investors are building fewer farms in the world’s third-
largest wind market after two government incentives expired in
March. Turbine makers are unlikely to offset the drop in demand
with exports as other major markets in China, the U.S. and
Europe also slow, according to Bloomberg New Energy Finance.

“Pressure will increase on manufacturers’ margins,” said
Shantanu Jaiswal, a New Delhi-based BNEF wind analyst. “The
industry may be setting itself up for future consolidation.”

The number of turbine suppliers in India last year almost
doubled to 24 from two years earlier amid surging installations,
according to IWTMA data. Among the newer entrants are Siva Wind
Turbine India Pvt., Chiranjjeevi Wind Energy Ltd. and Inox Wind,
which has partnered with American Superconductor Corp. (AMSC) for
turbine technology.

Awaiting Incentives

Indian installations topped 3,000 megawatts for the first
time in 2011, a 138 percent increase in two years, according to
data compiled by Bloomberg. Those investments were driven by a
tax benefit called accelerated depreciation and a subsidy known
as generation-based incentive, which boosted project returns,
helping wind compete with other forms of energy.

The incentives expired on March 31, and the Ministry of New
and Renewable Energy is seeking Cabinet approval for them to be
reinstated, according to Joint Secretary Tarun Kapoor.

If the incentives aren’t restored, the industry could
struggle to put up 2,000 megawatts by the end of this financial
year on March 31, according to BNEF’s Jaiswal.

“We’re assuming it will be reinstated but if it doesn’t,
it’ll significantly affect investments,” Sumant Sinha, chief
executive officer of ReNew Wind Power Pvt., a developer backed
by Goldman Sachs Group Inc., said on Sept. 28. “It’s a real
downer for the industry.”

To contact the reporter on this story:
Natalie Obiko Pearson in Mumbai at
npearson7@bloomberg.net.

To contact the editor responsible for this story:
Reed Landberg at landberg@bloomberg.net.

Comments are closed.