Going with the Wind – Trends and Opportunities in Indian Wind Power Value Chain

Wind energy, with an average growth rate of 30%, is the fastest growing source of renewable energy (RE) in the world. India has long played an important role in the world’s wind energy market and is the fifth largest wind power producer in the world (Source: Indian Wind Energy Association).  Wind power accounts for 6 per cent of India’s total installed power capacity and generates 1.6 per cent of the country’s power.

Despite of the above facts the potential of wind energy remains vastly untapped. Indian Wind Energy Association has estimated that with the current level of technology, the ‘on-shore’ potential for utilization of wind energy for electricity generation is of the order of 65,000 MW. This huge potential coupled with shorter gestation period for installing wind turbine promises to make wind energy a leading constituent of India’s Renewable Energy mix.

The wind energy value chain consists of a number of players – from the supply of raw materials to the transmission of electricity. These players provide prominent supporting products and services across each step of the value chain. Key players with a role to play in wind energy development include wind turbine manufacturers, dealers and distributors; wind project developers; consultants and contractors; electric utilities, government agencies and landowners.

Key Trends and Opportunities across the Value Chain

From past few years, along with the advancement in technology, size of wind turbine is also increasing gradually. However, the suppliers with the right expertise, facilities and capacity to deliver, on increasingly challenging orders have been thin on the ground. Main reasons for this are: companies are not integrated, wind turbine size has increased and wind turbine generators and gearboxes require state-of-art-technology know-how and huge investment. Therefore, there is particularly a shortage of generators across the world. Because of this, supply chain bottlenecks have become a constant threat. Many of the large wind firms have responded to this thread through Vertical integration. Firms such as Vestas, GE, Gamesa, and Suzlon have in-house supply of generators and controllers by buying out suppliers of critical components such as blades, generators and gearboxes. By bringing suppliers in-house, they could ensure that they would get the products on time, and at an acceptable price.

Further, the growth in wind energy sector is expected to bring forth a whole range of opportunities for Indian entrepreneurs and businesses, and these opportunities are present along the entire wind energy business value chain. In terms of opportunities across the value chain, except “wind turbine companies” stage, which is relatively more concentrated with the top four players holding a large share of the OEM (original equipment manufacturer) market (over 80 per cent of capacity installed during 2009), rest of the stages have ample opportunities for small and medium players. While opportunities do exist for new OEMs in India with the projected continuous growth in the wind industry, it should be noted that this is an area that faces intense competition from large global companies and entering the OEM domain will require significant capital and marketing investments. Acquisitions could be one of the ways for a medium or large business group to enter the OEM market. An example of this is the acquisition of controlling stake in WinWinD Oy, a Finnish manufacturer of wind turbines, by Siva Group of India.

Significant opportunities are also expected to open up in the manufacturing segment – especially for the manufacture of wind turbine components – with a move towards greater indigenisation in the wind industry. Attractive opportunities – some of which are niche in nature – are available in the services sector as well. These opportunities are available for diverse entities such as small businesses, landowners and entrepreneurs.

Also Read on GWI:

• List of Wind Energy Companies in India
• Wind Turbines in India