Responding to growing demand for clean power and going up against the likes of Suzlon Energy Ltd, US conglomerate General Electric Co. (GE) plans to set up a greenfield facility in India to manufacture wind turbines of capacities of 1.5MW and 2.5MW.
“We are the biggest manufacturers in the wind (turbine) business and that is an area that we are very interested in,” said John Krenicki Jr, president and chief executive officer of the Atlanta, US-based GE Energy, a part of GE.
“We fully localized wind turbine production in China. We can do the same thing in India. We are looking at India not just for India, but also for the world, for our supply chain,” Krenicki added.
Of the total installed capacity of 130,000 MW in the country, wind energy constitutes only 4.8%. Although India has a wind energy potential of 45,000MW, its installed wind power capacity is only 6,280MW.
The ministry of new and renewable energy estimates this to grow to around 18,000MW by 2012.
Mint reported on 12 April that GE is also planning to manufacture steam turbines for power projects in India.
“We plan to do it alone,” said Krenicki. “The total capacity of the machines manufactured at the facility can be very flexible. It will be something that we can scale very easily. We want to do it shortly. I would say it would not be a particularly massive investment,” he added.
Krenicki declined to elaborate on the investments and time frames.
Some industry experts, not privy to GE’s plans, say that setting up a new facility of the scale described by the firm will require an investment of around Rs400 crore.
GE’s plans for India will see it go up against established manufacturers such as Vestas RRB India Ltd and Suzlon.
“We have lots of competitors in every business,” says Krenicki. “We will compete on the merits, we will have to have the best products. We compete very effectively. We will be able to bring the best technology, best equipment, to the Indian market and then the customer will decide.”
However, “a new player coming in will have a huge entry barrier due to complete end-to-end solutions (from manufacturing turbines to setting up wind energy parks for customers and operating them) provided by players such as Suzlon”, said Shubhranshu Patnaik, an executive director at audit firm PricewaterhouseCoopers. “It is not an issue of supply and demand.”
Krenicki said GE will start with one facility, adding that “the biggest challenge will be to find Indian suppliers for components”.
Under Section 80-IA of the Income-tax Act, companies setting up wind energy projects get tax exemption up to 10 years, and depreciation benefits of up to 80% of the investment in the very first year of the project’s operation.