A shift in India's wind market toward bigger, more efficient projects is benefiting General Electric Co. (GE) as dominant turbine suppliers Suzlon Energy Ltd. (SUEL) and Vestas Wind Systems A/S (VWS) see cash dwindle.
"The market is opening up for new turbine makers," said Sunil Jain, chief operating officer of Green Infra Ltd., a New Delhi-based wind-farm developer. "The growth of GE turbines in the last year is more than what they achieved in 15 years."
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.
"A major development for the better is the emergence" of the new developers, IDFC Director Nithin Kaimal told a conference in New Delhi last week. "There's a greater emphasis now on the quality of the asset being developed. It's healthier for the industry because it means much better economics."
Suzlon, India's biggest turbine maker, had a 35 percent share of the country's wind market in the last financial year, down from 50 percent two years earlier, according to the Indian Wind Turbine Manufacturers' Association. Vestas was the fifth- biggest supplier, having been third-largest two years earlier.
They've ceded share to competitors such as GE, which agreed to supply at least 450 megawatts of turbines over three years to Hyderabad-based developer Greenko Group Plc (GKO), Greenko President Mahesh Kolli said in July. GE, which conducts turbine-only deals, didn't install a single machine in India in the previous three financial years, IWTMA data show.
"The market is evolving," Kirti Vagadia, chief financial officer of Pune-based Suzlon, said Nov. 9. "It's good that the challenge of executing projects is being shared by a new customer segment. The market size itself is increasing and we are in a good position."
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.
"My big concern is the health of the manufacturers," Green Infra's Jain said Nov. 8 in an interview in Noida, near New Delhi. "I'm worried about delays and their ability to execute projects."
The retrenchment of established producers also opens the door for Chinese turbine makers to enter India, Jain said. The increasing competition means "pricing will come down for sure," he said.
The number of turbine suppliers in India last year almost doubled to 24 from two years earlier, IWTMA data show. The country has the world's third-biggest wind market, after China and the U.S.