By 2030 the world energy needs are predicated to be between 30 and 60% higher than current levels, but of course depending upon the efficiency measures implemented. The International Energy Agency (IEA) estimates that around 4,800 GW of new energy capacity needs to be installed before 2030. This necessitates investments of a mind-boggling US$ 4 trillion.
Data indicates 50% of Europe's total energy supplies are imported, much of it from regions considered volatile. Air pollution due to burning of fossil fuels is proving to be a major problem in both developing and industrialized countries. It has been estimated by the World Health Organization (WHO) that it kills over 650,000 people per year in the People's Republic of China alone.
According to the Intergovernmental Panel on Climate Change (IPCC), global emissions must significantly begin to decline by 2020 in order to avert the worst impacts of climate change. The power sector accounts for around 40% of total carbon dioxide (CO2) emissions in the world. Under the Kyoto Protocol, industrialized state signatories have committed to reducing their emissions by an average 5.2% below 1990 emission levels by the year 2012. European Union (EU) member states have a binding target to supply 20% of the total final energy consumption from renewable sources by the year 2020.
Mainstream forms of renewable energy:
Wind power
Hydropower
Solar energy
Biomass
Bio-fuels
Geothermal energy
New and emerging renewable energy technologies:
Cellulosic ethanol
Ocean energy
Enhanced Geothermal Systems
Nanotechnology thin-film solar panels
The drivers for wind energy
The staggering growth of the global wind energy markets is being driven by a number of factors, which include the broader context of energy supply and demand, the increasing concern about environmental issues especially climate change, and the impressive improvements of the power generation technology itself. If we are to avoid the worst ravages of climate change, global emissions need to start declining before 2020. To be fair, the power sector is not the only culprit when it comes to climate change, but it is indeed the largest source of emissions, accounting for about 40% of CO2 and 25% of overall emissions.
In light of these events, wind energy is the only power generation technology that will be able to make a substantial difference in CO2 emissions in the crucial timeframe up to the year 2020. As it is quick to install, it's on track to saving 10 billion tons of CO2 by 2020. The global demand for energy is increasing at a breathtaking pace; this is going to require significant investment in new power generation capacity and grid infrastructure. Just as energy demand continues to soar, supplies of fossil fuels are dwindling and prices are at their most volatile.
Wind energy is a massive indigenous power source available virtually everywhere in the world. There are no fuel costs, no geo-political risks and no supply import dependency. As a result, wind energy makes sound economic sense. In contrast to other power generation sources, the price for the fuel needed over the total lifetime of a wind turbine is zero. This in turn takes away a substantial part of the investor's risk.
At many sites, wind power is already proving to be competitive with new-built conventional technologies and in some cases much cheaper than the existing sources. When the price of carbon is taken into account, wind power seems to be even more attractive. Job creation and regional economic development are also key factors in economic considerations around wind power.
Worldwide wind power installed capacity (As on 31st March, 2010)
Sl.
Country
Capacity
Sl.
Country
Capacity
Sl.
Country
Capacity
No.
(MW)
No.
(MW)
No.
(MW)
1
USA
36220
23
New Zealand
497
45
Argentina
30
2
China
25805
24
Norway
436
46
Latvia
29
3
Germany
25704
25
Taiwan
436
47
Croatia
27
4
Spain
19450
26
Egypt
430
48
Pacific Islands
24
5
India
11500
27
Mexico
416
49
Romania
22
6
Italy
5133
28
South Korea
364
50
Columbia
20
7
France
4690
29
Morocco
253
51
Uruguay
18
8
UK
4532
30
Hungary
201
52
Switzerland
18
9
Portugal
3725
31
Czech Republic
192
53
Cape Verde
12
10
Denmark
3495
32
Bulgaria
177
54
Cuba
12
11
Canada
3432
33
Chile
164
55
Russia
11
12
Netherlands
2227
34
Finland
147
56
Reunion
10
13
Japan
2110
35
Estonia
142
57
South Africa
9
14
Sweden
1560
36
Costa Rica
125
58
Israel
6
15
Australia
1551
37
Ukraine
94
59
Slovakia
3
16
Ireland
1381
38
Lithuania
92
60
Sri Lanka
3
17
Greece
1185
39
Iran
67
61
Ecuador
2
18
Turkey
1030
40
Caribbean
66
62
Jordan
2
19
Austria
995
41
Tunisia
54
63
Falkland Island
2
20
Poland
794
42
Nicaragua
40
64
Bangladesh
1
21
Brazil
740
43
Luxembourg
35
65
Peru
1
22
Belgium
563
44
Philippines
33
Total Capacity (MW)
1,62,545
Source: http://www.windpowerindia.com/statworld.html
Wind energy in India
India's growing industry needs reliable electricity power to operate efficiently. Wind farms have come up in places like Kutch (Gujarat) that provide a secure supply - and in the process, saving a lot of carbon dioxide. As one of the world's fastest growing economies, India is struggling to provide enough electricity to power its booming population and industry. In many parts of the country, the supply is unreliable and power cuts common.
It has been observed that there is a gap between electricity supply and demand of about 10%. In some states the peak time shortfall is as high as 25%. So power rationing is being practiced, including for industrial users. This is the advantage of wind power: it offers a solution which can be quickly deployed, either connected to the grid or operated independently. Many industries choose wind energy for the purpose of 'captive generation' (i.e. a power supply dedicated to satisfying the needs of a particular commercial enterprise).
The Oil and Natural Gas Corporation of India (ONGC) is a major gas and oil exploration and production company which has committed itself to become carbon neutral in the near future. In line with this, it has commissioned its first ever wind farm, the 51 Megawatt (MW) project at Motisindholi in the Kutch region of Gujarat. Officially inaugurated in September 2008, the wind farm will generate power for four local industrial centers operated by ONGC. It is now looking for more renewable energy investment opportunities.
Some statistics
India ranks 5th amongst the wind-energy producing countries of the world (after USA, China, Germany and Spain).
The estimated potential is around 45,000 MW at 50 meters above ground level.
Exhaustive wind resource assessment has been carried out in 650 stations spread over 27 States in the country.
A micro survey on wind resource for 97 wind monitoring stations has been completed to know the zonal influence and potential around the stations to meet the requirement of wind energy developers in the country.
Wind farms have been installed in 11 States.
More than 95% of the installed capacity belongs to the private sector in 7 states.
Many wind turbine manufacturers are currently active in India producing Wind Electric Generators (WEGs) rated between 225 kW and 2100 kW.
A large number of agencies have come up to supply components, spares, accessories and to provide services like erection, civil & electrical construction, consultancy etc.
Many water-pumping windmills and small aero-generators have been installed.
Wind-solar and wind-diesel hybrid systems have also been installed at a few places.
The Central Ministry and several State Nodal Agencies are encouraging the growth of the sector through financial incentives and policy support.
The Ministry of New & Renewable Energy (MNRE) has established a Centre for Wind Energy Technology (CWET) at Chennai with a field test station at Kayathar to act as a technical focal point for wind power development in the country.
Financial assistance for renewable sources of energy is available through Indian Renewable Energy Development Agency (IREDA), a supporting arm of MNRE.
Wind energy and Indian economy
The Ministry of Non-Conventional Energy Sources (MNES) was established in the early 1980s to satisfy the increasing energy demand of a rapidly growing economy by encouraging the diversification of the country's energy supply. MNES was renamed as the Ministry of New and Renewable Energy (MNRE) in 2006.
With an installed capacity of 13.2 CW, renewable energy sources (excluding large hydro projects) currently account for 9% of India's overall power generation capacity. By 2012, the Indian government is planning to add an extra 14 CW of renewable sources.
The MNRE estimates that there is a potential of around 90,000 MW for the country, including 48,561 MW of wind power, 14,294 MW of hydro power and 26,367 MW of biomass. The total potential for wind power in India was first estimated by the CWET at around 45 GW, and was recently increased to 48.5 GW. This figure was also adopted by the government as the official estimate.
At heights of 55-65 meters, the Indian Wind Turbine Manufacturers Association (IWTMA) estimates that the potential for wind development in India is around 65-70 GW. The World Institute for Sustainable Energy, India (WISE) considers that with larger turbines, greater land availability and expanded resource exploration, the potential could puff up to as high as 100 GW.
The following table details the estimated wind power potential in India:
Sl. No.
State
Gross Potential (MW)
1
Andhra Pradesh
8275
2
Gujarat
9675
3
Karnataka
6620
4
Madhya Pradesh
5500
5
Maharashtra
3650
6
Orissa
1700
7
Rajasthan
5400
8
Tamil Nadu
3050
Total
43870
(Note: Gross potential is based on assuming 1% of land availability for wind power generation in potential areas.)
Source: http://www.windpowerindia.com/statest.html
About Suzlon:
Suzlon Energy Limited is an Indian corporation that has gained valuable expertise in providing end-to-end solutions in the wind power sector, in the areas of assembly, installation and commissioning. The venture started off in 1995 with just 20 people and began with a wind farm project in the state of Gujarat (India) with a capacity of 3 MW. It is currently the 3rd largest wind power company in the world employing over 16,000 people in 25 countries.
It has a fully integrated supply chain, state-of-the-art manufacturing facilities and sophisticated R&D capabilities in Belgium, Denmark, Germany, India & the Netherlands offering a varied product and service range.
The company primarily operates in India, China, the Americas, Europe, New Zealand, South Korea and Australia. Their auxiliary focuses include designing and developing new Wind Turbine Generator (WTG) models, upgrading the company's current models and developing efficient and effective rotor blade technology for its WTGs.
Vision
Technology leadership in the wind sector
Be among the top 3 wind companies in all the key markets of the world
Be the global leader in providing profitable end-to-end wind power solutions
Be the "Stakeholders' Choice" Company
Mission:
To contribute to the sustainable development of wind energy sector through an integrated product design and manufacturing strategy
To increase contribution of wind power to meet to global energy demand
To create a better, greener tomorrow for all
Milestones:
1998: Company installed first wind turbine in Maharashtra Satara district.
2000: Commissioned 50MW wind turbine generator at Vankhusavade In Maharashtra.
2001: Formation of subsidiaries Suzlon wind Energy Corp, USA and Suzlon Energy.
2002: First export order, its First Wind Turbine in the USA.
2003: Representative office in Beijing, China.
2005: Korean Order for a 150 MW for the Jeju Wind Farm Project.
2006: 200MW Wind Farm Project for Australia Gas & Light Company.
2007: 400 MW deals with PPM Energy of Portland, USA Acquired German wind turbine company RE Power.
2009: Market entry into Sri Lanka with an order to supply 10 MW of wind turbine capacity to a project developed by Senok Wind Power Pvt. Ltd.
2009: Looking at the option to start business operations in the Canadian market in 2010.
Market share in 2008:
Products & Services Offered:
Products:
Wind Turbines
Components
Rotor Blade
Gearbox
Control Panels
Nacelle Cover
Tubular Towers
Services:
Wind Resource Mapping
Identification of Suitable Sites
Technical Planning of Wind Power Projects
Services and Maintenance
Project Development
Wind Farms Development
Major Clients:
MSPL LTD - India
TATA Group -India
RELIANCE Group -India
Edision Mission Group -U.S.A
John Deere Wind Energy -U.S.A
Tierra Energy -U.S.A
Maestrale Green Energy -Italy
Technologias Energeticas -Portugal
Ayen Energy Company -Turkey
SIIF Energy -Brazil
Australia Gas & Light -Australia
Global Presence:
Headquarters
Pune, India
Global Presence
21 countries: Australia, Belgium, Brazil, Canada, China, Denmark, Germany, Greece, India, Italy, New Zealand, Nicaragua, Portugal, Romania, Spain, Sri Lanka, The Netherlands, Turkey, Ukraine, UK, USA
Manufacturing plant
India: Maharashtra, Pondicherry, Gujarat, Daman, Padubidri
China: Tianjin
North America: Pipestone, Minnesota
R&D plant
Belgium, Denmark, Germany, India, The Netherlands
OJAS KA PART (I hv made changes till offshore market)
The Rise of Suzlon
When Suzlon entered the global market in 1998, it had been able to grab a big share of the market almost immediately. There was a huge demand for wind turbines as governments across the world looked for environment friendly alternative energy sources that would reduce dependence on hydrocarbon and coal based power plants. There was a big shortage of suppliers in the market, and that worked to its advantage. Big brands such as GE and Denmark's Vestas AS were unable to fill in the demands. Suzlon was able to capture this negative initially
According to BTM Consult ApS, the global wind energy industry was worth US$ 11.3 billion at the end of 2004. Technological advances have resulted in larger and better quality WTGs with higher generation efficiencies at lower costs and environmental awareness also resulted in increased demand for "green power" in developed countries. Europe accounted for 72.8% of the new installations in 2004 while 6.3% of the new capacity was installed in the Americas. Asia, including OECD Pacific almost doubled its installations to 1,648 MW thereby contributing to over 20% of the installations. The Spanish market was the largest market in the world in 2004, with 2,064 MW of installations. Europe with 34,725 MW, accounts for over 72.5% of the cumulative installations as on December 31, 2004.
Germany alone accounts for 34.7% of the global installations with cumulative installations of 16,649 MW at the end of 2004. According to the EWEA, in the period 1995-2000, wind power accounted for 23.4% of the net increase capacity from all fuel sources across the EU. The EWEA further estimates wind to account for 50% of the net increase from 2001 to 2010.
Key Growth Drivers
Increasing Electricity Demand:
In World Energy Outlook 2004, IEA estimated that the global electricity consumption to double between 2002 and 2030, with demand for electricity likely to increase at a much faster pace in developing countries like India and China. The IEA also estimated the share of wind power's share of total electricity generation to grow from 0.2% in 2002 to 3.0% in 2030 and that it will be the second-largest renewable source of electricity after hydroelectricity.
Increasing cost competitiveness:
The continuous focus on improving the cost efficiency of WTGs has resulted in wind power becoming increasingly cost competitive compared to traditional sources of energy. A continuous focus on improving the cost efficiency of WTGs has resulted in wind power becoming increasingly cost competitive compared to traditional sources of energy. Also the factors that have contributed in reducing costs are increasing focus on larger projects, technological advancements resulting in WTGs with higher capacity, economies of scale resulting from increase in the size of WTG manufacturers.
Environmental awareness and Government Initiatives:
Generating electricity from fossil energy sources releases carbon dioxide, which leads to the "greenhouse effect". As such, many countries, such as India, the United Kingdom, the United States of America and Germany, have provided fiscal incentives and schemes to encourage the growth of renewable energy. These incentives and schemes range from preferential tariffs or tax credits for renewable energy projects to taxing those who contribute to emission of carbon dioxide. In order to combat the greenhouse effect at a global level, the Kyoto Climate Summit was held in 1997 to further implement the commitments agreed upon at the Rio Earth Summit in Rio de Janeiro, Brazil.
According to the Kyoto Protocol, the participating countries have agreed to a long-term reduction of their carbon-dioxide emissions by an average of 5.2% compared to the level of emissions for 1990, by 2012. The greenhouse gas reduction targets have cascaded down to a regional and national level. These in turn have been translated into targets for increasing the proportion of renewable energy. Wind is a preferred source given its modular nature and ability to generate power at competitive cost and therefore many countries associations have set targets with respect to wind power installations.
Also, countries such as Australia and United States, have introduced the Renewable Portfolio Standard, or RPS, which mandates that renewable energy sources contribute a specified minimum percentage of total electricity supply. In Australia, the existing Mandatory Renewable Target requires that renewable energy make up a further 2% of total power generated by 2010.
Further, the system of carbon trading has also been initiated in countries in European Union and countries such as Japan. Carbon trading refers to a system wherein emitters of carbon dioxide and other harmful gases are required to purchase green certificates from clean energy producers including renewable energy producers.
Repowering:
Repowering involves the replacement of old WTGs with new and more cost efficient WTG. Repowering become very important growth drivers particularly for countries in Europe that had a large number of ageing WTG installations with relatively low capacity and outmoded technology. BTM Consult ApS, in its World Market Update 2004 estimated global potential for repowering between 2,500 MW to 8,700 MW in the period 2005-2014.
Offshore Market:
The offshore WTG market presented a new opportunity for wind power, especially in Europe. Several offshore projects have commenced operations, with Denmark accounting for a majority of them. Total offshore installations stood at 589 MW at the end of 2004.
Along with the growth factors mentioned above few steps taken by unions and various countries helped wind energy industry to grow. Steps taken by few of the major unions and countries are as follows,
European Union
Total Installed Capacity
Year
2001
2002
2003
2004
2005
2006
2007
2008
MW
17,315
23,159
28,598
34,371
40,511
48,029
56,531
64,719
Spain and Germany remain the two largest annual markets for wind power, competing each year for the top spot (2,459 MW and 1,917 MW respectively in 2009), followed by Italy (1,114 MW), France (1,088 MW), and the UK (1,077 MW). Eleven EU Member States - over one third of all EU countries - now each have more than 1,000 MW of installed wind energy capacity. Austria and Greece are just below the 1,000 MW mark.
For the past decade, the EU and certain Member States have shown strong support for renewable deployment. This has played a large part in wind power's spectacular growth in EU. Since 2001, EU Directive 77/2001/EC, which promotes electricity from renewable sources and attributes Member States indicative targets for 21% of EU electricity to come from renewable energy sources by 2010, has given an important boost to the sector. Each EU member state was set a national legally binding target for the share of renewable energy. In terms of electricity consumption, renewables should provide about 34% of the EU's power by 2020 to meet the binding EU target, with wind set to contribute 14-17%. Every two years Member States has to submit a progress report to the European Commission, containing information on their share of renewable energy, support schemes and progress on tackling administrative and grid barriers.
Certain measures to promote flexibility have been built into the Directive in order to help countries achieve their targets in a cost-effective way, without undermining market stability. They can also cooperate on any type of joint project relating to the production of renewable energy, involving private operators if they like.
Germany
Total Installed Capacity
Year
2001
2002
2003
2004
2005
2006
2007
2008
MW
8,754
11,994
14,609
16,629
18,415
20,622
22,247
23,903
Despite the financial and economic crises, the German wind market recovered and experienced 15% growth. 958 wind turbines totalling 1,917 MW of capacity were added to the German fleet, including 136 MW repowering and 60 MW offshore. Germany still leads Europe with a total installed capacity of 25,777 MW. 38 TWh of wind power were generated in Germany in 2009, in a wind year that was below average, accounting for about 7% of the country's net power consumption. All renewable energy sources combined produced around 17% of Germany's electricity needs, with wind being the largest single contributor within the renewable energy mix.
Spain
Installed Capacity
Year
2000
2001
2002
2003
2004
2005
2006
2007
2008
MW
2,235
3,337
4,825
6,203
8,263
10,027
11,623
15,145
16,689
In 1999, the Spanish government set a target of achieving 12% of total energy consumption and 29% of electricity from RES by the year 2010. The EU RES Directive of 2001 stipulates that by 2010, at least 29.4% of final electricity consumption should be met by renewable sources. In 2005, the Spanish government set a goal for the country's installed wind power capacity to reach 20,155 MW by 2010. In order to boost the uptake of renewable energy, a feed-in tariff system was first introduced in 1997 and then amended in 2004 and 2006 . According to the latest modification, there are now two alternative remuneration options for wind power:
Italy
Total Installed Capacity
Year
2000
2001
2002
2003
2004
2005
2006
2007
2008
MW
427
690
797
913
1,255
1,718
2,123
2,726
3,736
The 1999 Bersani decree provided for the gradual liberalisation of the Italian electricity market and encouraged generation from renewable sources by introducing priority grid access for renewable electricity, as well as a renewable energy quota system. This requires power producers and importers to produce a certain percentage of electricity from renewable sources. Green certificates are used to fulfil this obligation, starting from 2% and gradually increasing. In January 2002, Italy implemented a new support mechanism for renewable energy sources based on Green Certificates, to replace the abolished CIP6 regime and to complement the quota system.
France
Total Installed Capacity
Year
2002
2003
2004
2005
2006
2007
2008
MW
148
253
390
757
1,567
2,454
3,404
A feed-in tariff was introduced in France in 2002, ensuring a tariff of 8.2 ct€/kWh for a period of 10 years, which then decreases during the next five years of the contract.
In July 2005, this law was amended to stipulate that in order to be eligible for the feed-in tariff, wind farms must be built in special Wind Power Development Zones (ZDE). These zones are defined at the regional level based on the criteria of electrical production potential, grid connection capacity and landscape protection. The law also did away with the previous size limit of 12 MW for wind farms.
United States
Total Installed Capacity
Year
2000
2001
2002
2003
2004
2005
2006
2007
2008
MW
2,578
4,275
4,685
6,372
6,725
9,149
11,575
16,824
25,237
The US Congress passed the American Recovery and Reinvestment Act (ARRA), an economic stimulus bill which included several provisions to spur development of wind energy in the adverse economic climate, such as:
• Introduction of the Production Tax Credit (PTC)
• Tax credits for new manufacturing facilities;
• A new $6 billion Department of Energy (DOE) renewable energy loan guarantee program. These financial incentives, and particularly the grant programme, have been very beneficial in keeping the industry moving forward.
The main reason for the robust growth was a federal tax credit of 2 cents per kilowatt hour of energy produced The tax credit help developer's to reduce costs to about 7 cents per kilowatt hour, placing wind costs on par with coal-fired plants. Also Congress approved the tax credit in the 2005 energy bill. That gave turbine manufacturers confidence in a sustained market for their products. Another factor pushed wind development was that 29 states required utilities to include a percentage of renewable energy in the mix of power they generate and buy. A growing numberof states also are adopting plans to reduce emissions of greenhouse gases, such as carbon dioxide, that cause global warming.
China
TOTAL INSTALLED CAPACITY
Year
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
MW
346
402
469
567
764
1,260
2,599
5,910
12,020
25,805
The start of the government's active engagement in renewable energy development dates back to 2004, when the nation was drafting its first "Renewable Energy Law". The law was adopted in 2005 and entered into force in 2006. It gave huge momentum to the development of renewable energy and the wind industry has grown at a frantic pace since then.
The Renewable Energy law marks a major shift in energy policy towards market supportive policies for renewables. It stipulates, for the first time, that grid companies have the obligation to purchase the full amount of the electricity produced from renewable sources. Already in 2005, when the law was passed, the annual growth of the Chinese wind market reached 60%, followed by four consecutive years of over 100% growth.
In 2007, the first implementation rules for the Renewable Energy Law emerged, giving further impetus to wind energy development. In addition, the "Medium and Long-term Development Plan for Renewable Energy in China", released in September 2007, set out the government's long term commitment to renewable energy up to 2020, putting forward national renewable energy targets, priority sectors, and policies and measures for implementation
Competitors:
Vestas:
Vestas Wind Systems is a Danish manufacturer, seller, installer, and servicer of wind turbines. It is the largest in the world, but due to very rapid growth of its competitors its market share decreased from 28% in 2007 to 12.5% in 2009. The company operates manufacturing plants in Denmark, Germany, India, Italy, Britain, Spain, Sweden, Norway, Australia, China, and the United States, and employs more than 20,000 people globally.
Vestas was founded in 1945 by Peder Hansen as "Vestjysk Stålteknik A/S" (West-Jutlandish steel technology). The company initially manufactured household appliances, moving its focus to agricultural equipment in 1950, intercoolers in 1956, and hydraulic cranes in 1968. It entered the wind turbine industry in 1979.
In 2003, the company merged with the Danish wind turbine manufacturer NEG Micon to create the largest wind turbine manufacturer in the world, under the banner of Vestas Wind Systems. After an operational loss in 2005, Vestas recovered in 2006, and continues to have 28% market share.
Vestas has installed over 41,000 wind turbines in 63 countries on five continents. The company employs more than 22,000 people globally, and has built production facilities in more than 12 countries. It is currently expanding and opening up new production facilities in China, Spain and the United States.
Enercon:
Enercon GmbH, based in Aurich, Northern Germany, is the third-largest wind turbine manufacturer in the world and has been the market leader in Germany since the mid-nineties.
One of Enercon's key innovations is the gearless (direct drive) wind turbine in combination with an annular generator. This is unlike most other wind turbines, which use a potentially less reliable gearbox in order to increase the rotation speed of the generator.
As of November 2009, Enercon has installed more than 15,000 wind turbines, with a total power generating capacity exceeding 18.5 GW. Their most-often installed model is the E-40, which pioneered the gearbox-less design in 1992. Enercon has production facilities in Germany (Aurich, Emden and Magdeburg), Sweden, Brazil, India, Turkey and Portugal
Enercon was prohibited from exporting their wind turbines to the US until 2010 due to alleged infringement of U.S. Patent 5,083,039. Recently a cross patent agreement was agreed with its competitor General Electric.
GE wind Energy:
GE Wind Energy is a branch of GE Energy, a subsidiary of General Electric. The company involves in the manufacturing and selling of wind turbines to the international market. The branch was established in 2002 after GE acquired the wind power assets of Enron during its bankruptcy proceedings.GE is one of the world's leading wind turbine suppliers. With over 13,500 wind turbine installations worldwide comprising more than 218 million operating hours and 127,000 GWh of energy produced, their knowledge and expertise spans more than two decades. With wind manufacturing and assembly facilities in Germany, Norway, China, Canada and the United States, GE's current product portfolio includes wind turbines with rated capacities ranging from 1.5 to 4.0 megawatts and support services ranging from development assistance to operation and maintenance.
Source:
Website of Global wind power energy council
Website of Suzlon Enrgy
Website of Vestas.
Website of Enercon
Website of GE energy.
Draft Red Herring Prospectus,Suzlon Energy
Dated July 11, 2005
Report by BTM consult Aps report 2005
Mergers & Acquisitions:
When Suzlon entered the global market in 1998, it had been able to grab a big share of the market almost immediately. There was a huge demand for wind turbines as governments across the world looked for environment friendly alternative energy sources that would reduce dependence on hydrocarbon and coal based power plants. There was a big shortage of suppliers in the market, and that worked to its advantage. Big brands such as GE and Denmark's Vestas AS were unable to fill in the demands. Suzlon was able to capture this negative initially.
RE Power:
REpower is a German wind turbine company founded in 2001, purchased by Suzlon Energy Ltd in for in 2007 for about Rs 7,300 crore, pipping French energy major Areva . Its product range comprises several types of turbines with rated outputs of between 1.5 and 5 megawatts. It created the world's largest wind turbine, the 5M, in 2005. This has since been superseded by the Enercon E-126. REpower's 1.5-megawatt MD 70/77 range of turbines is one of the most successful turbines in its class.
With this acquisition Suzlon hoped to capture the offshore market. But German rules did not allow Suzlon to have 100 per cent control for three years, and this hampered the speed with which it could move into the market.
Suzlon Areva Agreement:
Suzlon also made an agreement with French base Areva. Areva supplies solutions for carbon-free power generation. AREVA's unique integrated offer to utilities covers every stage of the fuel cycle, nuclear reactor design and construction, and related services. The group is also expanding considerably in renewable energies - wind, solar, bioenergies, hydrogen and storage
Areva has concluded a cooperation agreement with Suzlon which includes the following terms:
It maintains its stake in REpower and continues supporting REpower;
It becomes preferred supplier of Suzlon in the field of electricity transmission and distribution;
It benefits from an exit guarantee ensuring a value creation of over €350M.
With this acquisition and through voting pooling agreement with Martifer of Portugal - another major shareholder of REpower - Suzlon enjoys voting rights of about 91 percent in Repower. Suzlon currently holds 91% stakes in Repower.
Hansen Transmissions International NV:
In March 2006 Suzlon Wind Energy signed a definitive agreement for the strategic acquisition of Hansen Transmissions. Hansen Transmissions is a major wind turbine gearbox manufacturer with state of the art manufacturing facilities in Edegem and Lommel in Belgium. Hansen Transmissions International NV ("Hansen"), headquartered in Belgium has a strong R&D capabilities and modern manufacturing facilities. Suzlon gains technological leadership from the integration of research and development, design and production to evolve the next generation of more reliable wind turbines.
Suzlon Energy Limited ("Suzlon") with its subsidiary, AE - Rotor Holding BV based in Netherlands entered into definitive agreements to acquire Hansen Transmissions International NV, for EUR 465 million (RS 2511crores) enterprise value, in an all cash transaction.
This acquisition helped Suzlon to access to global market, leveraging the synergy with the existing businesses, strengthening the acquired by the company by a better management, reduce competitive thread and vulnerability to the other global giant and create a global company.
This acquisition gives Suzlon the following benefits:
It gives Suzlon the highest level of vertical integration in the wind turbine industry. Suzlon now makes all the major components in-house- these being rotor blades, gear boxes, generators and towers.
It helps Suzlon pursue its growth objectives without being exposed to the shortage of components, especially gearboxes, where demand outstrips supply.
It helps Suzlon in designing and manufacturing better products: Hitherto the turbine and gearbox manufacturers have not had full access to each other's designs and the final product has fallen short of being optimal. Suzlon is in a position to design more optimum products as it will have complete access to all component technologies.
Suzlon leverages the Hansen technology and set up capacities for manufacturing additional gear boxes in markets such as China and India. This does not only help expansion in margins for Hansen, but also helps it capitalize on the growth opportunities in the gear box industry.
Volkswind Bulgaria GmbH:
Another recent Joint Venture of Suzlon is with the Bulgarian subsidiary of Germany's Volkswind GmbH. Suzlon Wind Energy A/S, the European division of Suzlon Energy Limited, the world's third leading wind turbine maker, has entered into a joint venture with Volkswind -
Bulgaria GmbH through the company Wind DIV in April 2010.
Volkswind Bulgaria is a subsidiary of Germany's Volkswind GmbH, one of the leading Independent Power Producers (IPPs) in Europe, and with over 40 wind farms it is also one of the largest operators of wind farms in Germany.
The joint venture is aimed to accelerate Suzlon's growth into the Bulgarian wind energy market combining Volkswind's local knowledge and development experience with Suzlon's expertise in developing utility scale projects. The joint venture will develop projects exclusively using Suzlon wind turbines.
Effect of Merger & Acquisitions:
Suzlon
(5th Largest globally in Wind energy sector)
RE Power
(Recognized technology leader with strong presence in Europe)
Hansen Transmissions
(2nd Largest globally in Wind gearboxes)
Geographical Presence
India, the US, China, Australia, Europe, Latin America with 9.0% global market share
Europe, China (mainly Germany with 10% market share)
Europe, India, South Africa, USA
Current Capacity
(MW)
4,200
1,250
7,300 (Gearbox MW)
Expansion Planned (MW)
1,500
450
8,000 (Gearbox MW)
Total Capacity Post Expansion (MW)
5,700
1,750
14,300 (Gearbox MW)
Product Portfolio
Sub-MW to Mainstream range WTGs (350 kW - 2.1 MW)
Mainstream range to Multi-MW class WTGs (1.5 MW - 6.15 MW)
WTG Gearbox (500 kW - 6 MW; 160 - 3,500 kNm)
Employee Base
13,000 +
1,800 +
2,400 +
Performance of acquisitions:
SWOT ANALYSIS:
STRENGTH
WEAKNESS
Vertical integration
End to End Solutions
Market leader in India and Global Presence
Integrated Business Model
Innovation
The Electricity Act, 2003
Management Structure
Capital Intensive
Overseas Business
Financial Performance
Entry barriers in Chinese market
OPPORTUNITY
THREATS
Environmental and Government initiatives
Favorable tax exemptions
Untapped offshore Market
Green Power
Intense competition
Over dependence on US
Decreasing Price of crude
Dependency on Government policies
STRENGTH:
Vertical integration:
Suzlon is a vertically integrated wind power company, having end-to-end solutions from assembly, installation to commissioning. The company manufactures blades, generators, panels, and towers in-house, as well as gearboxes through its partial ownership of Hansen Transmissions and state-of-the-art large or offshore turbines through its subsidiary REpower. Suzlon is integrated downstream and delivers turnkey projects through its project management and installation consultancy, and operations & maintenance services. Suzlon has offices, R&D and technology centers, manufacturing facilities and service support centers spread across the globe.
End to End Solutions:
Planning of Wind Farm Systems, Land Acquisition, Development and Technical Design, Infrastructure and Equipment, O&M services. Suzlon offers customers' end to end wind energy solutions, including wind resource mapping, site development and installation, and finally operations & maintenance services in India. This allows Suzlon to offer Indian customers economies of scale, and eliminates the need for customer involvement in the complex process of wind farm development.
Market leader in India and Global Presence:
The industry's outlook is to turn favorable by 2010 as easing credit and lower costs boost demand from the U.S., Europe, China and India.
Integrated Business Model:
The Company plans to enter in to Solar and Bio-fuel Business. The company is conducting feasibility study for the further approach in this business. This will help the company to produce 10-20 MW additionally. It has become global/ world-wide sponsor for CNN International innovative capsule on environment preservation.
Innovation:
Suzlon's R&D effort includes a highly successful practice of leveraging skill and knowledge pools in the industry and allied areas the world over. This has resulted in a R&D network located across geographies.
The Electricity Act, 2003:
The Electricity Act, 2003, specifies that a minimum percentage of power generation should come from non-conventional energy sources. For example, the Karnataka government has mandated 5% from non-conventional sources, and the Madhya Pradesh government 0.5% This reflects the government's intention of reducing the dependence on fossil fuels and cut down carbon dioxide emission. Moreover, perennial power shortages assure a sustained growth in demand for power generation.
WEAKNESS:
Management Structure:
The Company is fully dependent on promoter Tulsi Tanti. In fact the board of directors have only two Tanti brothers as executive directors. Three other board members are non-executive independent directors.
Capital Intensive:
Wind power projects require high upfront capital investment per kWh of energy. So demand will be sensitive to interest rates.
Overseas Business:
Suzlon Energy is expanding overseas, where major players have established markets. The advantage of new markets and new orders may take time, while marketing, personnel and other initial costs could jump. Hence, this may put pressure on the margin in the short run. Risks involved in overseas business are also higher, Company is facing liquidity crunch to pay its debt recently promoters had sold their holding in the company. So expansion plan may further increase the burden on the company balance sheet.
Financial Performance:
Suzlon is in need of restructuring the debt of about Rs 11,800 crore which it raised for various national & global acquisitions. The Company faces foreign exchange loss of nearly Rs 435 crore because of that 500 million zero coupon convertible foreign Currency Convertible Bond (FCCB) which is still pending are due in 2012. The blade retrofits and consequentially availability charges of nearly Rs 307 crore is another concern area and the third is the mark-to-market MTM) loss of nearly Rs 215 crore which is on account of foreign exchanges forwards options contract which the company has taken to hedge. These are the three important areas - the foreign exchange loss, blade retrofits and MTM loss which can affect the company's profitability in coming time.
Entry barriers in Chinese market:
China is seen as the most emerging & fastest growing market for wind energy. China has a robust grid system, which can manage both sources of power at every stage of distribution and transmission. It is one of the reasons why Suzlon is betting on China as a big market. But, China has been encouraging local companies more than multinationals.
The challenge is going to get tougher for companies in China, with Chinese equipment makers both in power and telecom facing some heat from the Indian government.
OPPORTUNITIES:
Environmental and Government initiatives:
The projections of Ministry of Non-Conventional Energy Sources says10% of the 2, 40,000MW (i.e. 24,000MW) installed capacity requirement by the year 2012 A.D. will come from renewable. It is envisaged that 50% of this capacity or 12,000MW may come from wind power.
Favorable tax exemptions:
The Wind Energy industry enjoys special tax benefits from government and subsidies from regulatory bodies. Better tariffs, policy support and optimistic outlook are driving investment in this sector.
Untapped offshore Market:
According to the estimate the demand for power is still high in India even during the recent global slowdown. The gap between supply and demand is increasing .According to the CEA estimates by 2012 the energy demand is expected to increase by 44%.
Green Power:
The existing power sector emits around 40% of global carbon dioxide emissions and there are only three options to substantially reduce these emissions between now and 2020: energy efficiency, fuel switching, and renewable, predominantly wind power. Wind power could produce 12% of the world's energy needs and save 10 billion tones of CO2 within 12 years; thus addressing the environmental concerns all over the world.
THREATS:
Intense competition:
The Indian wind industry was placed third in terms of total installed capacity of wind electricity in the world some years back. It suffered a great setback when this rank shifted down to fifth after the United States, Germany, Denmark, and Spain in later years. The fastest growing wind markets are Turkey, Mexico, Brazil, China, and Poland.
Over dependence on US:
USA accounts for 50% sales for Suzlon. Recent economic slowdown results affects the States wind energy sector which results in liquidity crunch and investment setback in India.
Decreasing Price of crude:
There is a direct correlation between Crude prices and Wind energy demand. If the crude suffers from low prices which indicate the overall fall in demand in infrastructure and energy demand then it would affect the growth of the Sector.
Dependency on Government policies:
Probably, the biggest problem for Suzlon is that wind energy requires so much government support to be a viable market. Take away the sops or put the government stimulus behind other alternative sources of energy such as solar, the impact it will have on wind power companies will be devastating. Changes in Government policies in European countries during economic slowdown impacted Suzlon's growth in big markets.
