General Electric emerges as a Winner in the Indian Wind Market
The Indian Wind Energy Market which is dominated by the top global wind turbine companies has seen General Electric winning marketshare as the others pull back. Note Vestas, Gamesa and Suzlon have been losing billions of dollars in the last few years as competition from China has rapidly decreased prices and volumes. Note Suzlon remains mired in a massive debt crisis lurching from one problem to a greater one. Vestas and Gamesa too have remained in a recession post 2008, never having really recovered after the Lehman crisis. The wind energy market has shown increasing signs of maturity and flat lining of growth. The Chinese wind turbine makers have rapidly grown marketshare bolstered by their large domestic market.
General Electric thanks to its vertical integration and financing capabilities has not been hurt as much as the pure wind turbine producers. The company is now capitalizing on the woes of the others to win marketshare in the world’s 5th largest market. Vestas has decided to pull out of the Indian market as it is cutting costs drastically to as its profits evaporate. Gamesa too has laid off a number of workers in the Indian market which accounts for more than 10% of its global revenues.
Read about Indian Wind Energy Companies.
Chinese turbine makes entry into Indian wind market
Dongfang Electric Corporation, China’s largest power equipment producer has bagged major contracts in India. Dongfang Electric is the 3rd biggest Wind Turbine Producer in China as well and has managed to bag a 276 MW $203 billion WTG supply contract with Abhijeet Group. This is the first major contract wind in the Wind Equipment Sector for a Chinese company and could be start of a major trend. Dongfang has also won a small a massive $2.5 billion contract to supply 6GW of super critical coal equipment to KSK Energy. Note Chinese companies have become the low cost leaders in the Wind Equipment Industry and sell much below Western competitors. At almost $700,000/MW, the turbine order is a steal for the Abhijeet Group and cannot be matched by Indian or Western players. Leading WTG companies from the West like Vestas and Gamesa are reeling from Chinese competition and slowdown in Western markets. Suzlon too has been affected as Korean shipbuilders and Chinese wind producers have become major players. Using domestic content requirements and technology transfer, Chinese companies have become top global producers from zero presence just 5 years ago.
Why Suzlon Revival looks impossible as it lurches from one Crisis to another
Suzlon which is India’s biggest wind company and one of the biggest turbine suppliers in the world has never recovered from the 2008 crisis. The company which used to be the 5th biggest wind turbine supplier with a market capitalization of over $10 billion is now a shadow of its former self. The company has around $2.5 billion in debt which it is finding impossible to serve with continued losses plaguing the wind equipment industry. The wind industry has radically changed since 2008 and once the impregnable players like Gamesa, Vestas, Suzlon are now targets of consolidation.
Read about Global Wind Energy Companies.
Gamesa’s action in India is yet another symptom of the tough conditions prevailing in the Indian wind power industry. In wanting to reduce its manpower, Gamesa is in good company — wind turbine manufacturers such as Suzlon and Vestas have also announced manpower reduction. Only, Regen Powertech seems to be bucking the trend and has plans to hire. The number of people laid off in India is the least globally. In China — which for Gamesa is the only manufacturing hub other than its home country, Spain — as many as 680 people are to be laid off. The most employee reduction is, not surprisingly, happening in Europe, where the company will lay off 1,280 people. In the US, 505 Gamesans will need to look for other jobs.
Google+A shift in India’s wind market toward bigger, more efficient projects is benefiting General Electric Co. as dominant turbine suppliers Suzlon Energy Ltd. and Vestas Wind Systems A/S see cash dwindle. Developers in India are building more productive wind farms, ditching a business model set up by Suzlon and Vestas that handed completed farms to investors seeking tax relief rather than energy. The end of the tax benefit in March favored newer developers that separate project development from turbine orders to boost power output, IDFC Private Equity Co. said. Vestas CFO Dag Andresen said last week that the company was “scaling down” in India as it forecasts 500 million euros ($636 million) of cash losses this year. Suzlon, which said Nov. 9 that a lack of working capital was constraining its ability to complete orders after reporting a fourth quarterly loss, defaulted on $209 million of convertible bonds last month.
