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Suzlon’s hopes soar in China

November 26, 2010

Suzlon, India’s largest wind energy company is planning to set up offshore wind projects in China within the next three years. “The current target plan is to start in 2013,” Tulsi Tanti, Chairman Suzlon told Bloomberg in a phone interview. The Ahmedabad-based company is currently looking for a Chinese partner to build offshore wind projects, he added. The Chinese market which is big on green energy is expected to generate 5,000 megawatts of orders a year. Suzlon also has preliminary estimates showing India may have the potential to produce 25,000 megawatts of power from wind farms at sea, especially in areas off Tamil Nadu and Gujarat states. India’s offshore market is also expected to develop within four years. However currently India remains way behind China, in 2009, India added 1,271 MW installed wind power capacity while China added 13,000 MW.

Tapping into the massive potential for green, clean energy a prerogative in Beijing hasn’t come easy for Suzlon, which is based in Tianjin, on China’s north eastern coast. The Indian headquartered company recently hired their first Chinese CEO He Yaozu. Mr He’s has been a senior adviser to China Machienary New Energy and serves as a non executive director of China Green Power. He’s mandate is to increase Suzlon’s footprint in China by localizing the company, much like Chinese firms Huawei and ZTE have had to do in India.

“Right now, the perception in China is that Suzlon is an international company, but Suzlon China is a Chinese company, with Chinese manufacturing facilities, Chinese staff and a Chinese supply chain,” He said. “Now, the last piece is installed, a Chinese CEO.”

“Going local”, Mr. He said, was crucial in the domestic player-dominated China market. The company would position itself as a firm “with German technology, but China prices.”

Suzlon, which has invested more than US$300 million in China over the past five years, has been executing contracts up to 1 GW and now has a 3.4 percent market share. It has struggled to compete with bigger Chinese players, who have cornered around 80 percent of the wind power market, and Western firms like Vestas and GE. The Suzlon Group is now ranked eighth in the fast-growing wind sector in China.

While western and Chinese firms control a majority of the market, Suzlon believes that customers will see the value in their products as the market matures. Right now, quality of wind turbines is low, maintenance is high and the market hasn’t matured enough to demand better quality at higher prices. However, He told the Hindu that he believed the Chinese market was now maturing with an increasing emphasis on quality, against the backdrop of a shifting policy focus from rapidly increasing installed capacity to sustaining electricity generation. “If you buy a turbine that lasts you for 10 years, 25 percent of its lifetime is under repairs,” he said. “If you pay a little bit more, and you have a turbine with a 15-year life-cycle and 95 percent reliability, it doesn’t take a rocket scientist to figure out the economic returns.”

Suzlon has big plans for China. It plans to open a research and development centre in Tianjin and as part of its going local initiative, it will also launch value-added services, including providing consulting and financing support to foreign companies which are looking to set up wind farms in China.

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