Vestas Seeks to Double Wind Turbines in India on Incentives
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By Dinakar Sethuraman
Nov. 18 (Bloomberg) -- Vestas Wind Systems A/S, the world?s biggest maker of wind turbines, said it plans to almost double its capacity to produce wind-power equipment in India as the government offers new incentives for renewable energy.
The Randers, Denmark-based company aims to boost capacity to about 500 megawatts in India in the next three years, said Sean Sutton, president, Vestas Asia Pacific.
?The new generation-based incentives, which we hope will be announced later this week, will help India meet some of its energy shortages sooner,? Sutton said in an interview at Clean Energy Expo in Singapore today. ?We are looking at India for research and technology.?
Vestas joins General Electric Co. and India?s Suzlon Energy Ltd. in building plants to supply equipment to India, which plans to double wind energy capacity in the five years to March 2012. The Indian government plans to change its subsidy program to favor wind-energy generation rather than investment in turbines, aiming to speed development of projects.
The wind power market has ?dropped somewhat or leveled off? from 2008 and next year may be ?relatively stable? before growth picks up in 2011, Sutton said. Projects in India and China were relatively unaffected by the global recession while Australian ventures faced funding constraints, he said.
GE Energy, the biggest maker of power-generation equipment, said in September it will build wind turbines in southern India with an annual capacity to produce 300 machines of 1.5 megawatts each. Customers have been lined up to buy some of these, it said.
Adding Capacity
Indian companies added 222 megawatts of wind power in the first four months of the fiscal year, taking the total installed capacity to 10,464 megawatts, according to data on the Web site of the Ministry for New and Renewable Energy.
India?s wind generation capacity ranks fifth in the world, according to the 2008 Global Wind Energy Council report. One megawatt is enough to power about 800 average U.S. homes.
Customers have greater incentive to produce power or to expand the number of turbines on a given farm as the new generation-based incentives are introduced, Steve Bolze, president and chief executive of GE?s Power & Water business, said in September.
In India, the outgoing incentive system for investors in wind energy allowed them to claim 80 percent depreciation on equipment costs in the first year. That helped companies such as India?s Suzlon Energy Ltd. become the world?s fifth-largest maker of wind turbines.
Improve Returns
?The new generation-based incentives should improve the returns to investors,? Sutton said. Borrowing costs in India at about 11 to 12 percent are high compared to other countries and the incentives improve returns, he said.
Vestas, which has 10 percent of the Indian market and installed more than 2,100 megawatts of wind power as of June, won an order for 60 turbines of its V82-1.65 MW model for a project in Tamil Nadu in India from CLP, the largest foreign investor in the Indian power sector, it said in a statement in September.
Vestas shares have gained 23 percent this year, compared with a 36 percent increase in the benchmark Copenhagen OMX 20 Index.
India?s demand for power may almost triple to as much as 335,000 megawatts by 2017, from 120,000 megawatts now, if economic growth continues at an average of 8 percent for the next decade, according to consulting firm McKinsey & Co.
Vestas leads in total installed megawatts of wind turbines, followed by GE Wind Energy, Gamesa Corporacion Tecnologica SA of Spain, German rival Enercon GmbH and Suzlon Energy Ltd. of India and Siemens AG.
To contact the reporter on this story: Dinakar Sethuraman in Singapore at dinakar@bloomberg.net.
Last Updated: November 18, 2009 04:04 EST
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http://www.bloomberg.com/apps/news?pid=20601072&sid=aRIeq2Z8yYhE
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