India’s Major Wind Companies Face A Bleak Future As Auctions And Solar Squeeze Them Like A Lemon

Major wind energy companies in India such as Suzlon, Gamesa, Inox were having a good time over the last few years even as most large electricity companies were in doldrums. The feed in tariff policy in wind energy gave them assured returns and allowed them to make high margins with the price paid by consumers. These companies also did not allow foreign competitors such as GE and Vestas to get into the Indian market by using their control of giving licenses to wind turbines. Holding large tracts of valuable high wind resource land was also used as a cheap tactic to create hurdles for a free competitive market.

The new Piyush Goel led energy ministry has thrown out the Indian wind cartel by holding the first wind energy auction. The prices seen during this auction shows the massive price gouging that they were doing all these years. Even as wind feed in tariffs range between INR 4-6/kWh (7- 9 cents), the price discovered in the auction was just 5 cents. The non-competitive scenario in the wind industry was the one reason that wind turbine manufacturers and wind power developers were having a good time. Both these stakeholders were in bed together to fleece the Indian consumers through higher prices. But now the whole game is up. Not only has the government removed their powers to give license to wind turbines but the recent auctions means that no self respecting government will use feed in tariffs for wind power farms anymore. Wind power will go the solar energy way and reverse auctions will be used in which making profits will be tough.

Also read why Indian Wind Energy Prices Expected To Show A Sharp Decrease

Already, major wind turbine players such as Gamesa are facing the heat as it has been said that they might not get even 1 MW out of the 1000 MW that was awarded to 4 project developers. While Inox will use its own wind turbines, others may use foreign turbines from GE, Vestas which are said to be more efficient and of better quality.

While the chairman of Gamesa, Ramesh Kymal, is trying to be brave by saying that India will install 6 GW of wind power next year, it looks like an empty statement. Solar power is cheaper and faster to install. Its price is already lower and will go even lower in the coming years. The wind turbine makers are already choking based on the current wind price of INR 3.46/kWh, which is 5% higher than the recently discovered solar price of INR 3/kWh.

If you are an investor in Inox or Suzlon stock, then it might be a good time to sell your shares. Though these companies have ventured into solar energy, they are bit players in a huge solar market with many players being larger in size. The golden days of the wind turbine oligopoly are gone for good in the country.