USA - GE Revives Indian wind business as subsidies improve

General Electric Co., the biggest maker of power-generation equipment, is reviving its Indian wind-turbine business after a four-year absence because the government has improved incentives.

Fairfield, Connecticut-based GE said this month it will build wind turbines in south India with an annual capacity to produce 300 machines of 1.5 megawatts each. Customers have been lined up to buy some of these, Steve Bolze, president and chief executive of GE’s Power & Water business, said in an interview. The Indian government has changed its subsidy program to favor wind-energy generation rather than investment in turbines, aiming to speed development of electricity from clean energy.

“As you shift more to generation-based, customers have greater incentive to produce power or to expand the number of wind turbines on a given farm,” Bolze said last week in New Delhi. The move for GE is a way to reduce its dependence on the U.S. market, said Keith Hays, director of research at Emerging Energy Research in Barcelona, Spain. “The U.S. wind market grew very quickly over the past couple of years but as the financial crisis set in, GE was particularly exposed to that regional dependence,” he said. “There’s been a steady shift over the last six to nine months of GE looking more and more at international markets.”

Suzlon Orders:
In India, the earlier 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. GE is reentering the Indian market when Suzlon has been buffeted by quality issues and slowing orders. “We have some opportunities that we have already solidified with customers,” Bolze said, without being specific.

India is ranked fifth globally in wind energy with an installed capacity of 9,645 megawatts, according to the 2008 Global Wind Energy Council report. One megawatt is enough to power about 800 average U.S. homes. India estimates the country has the potential to produce 45,000 megawatts of wind power. “Making 300 units in India is an important step,” said Hays. “I don’t think any other turbine manufacturer has made an investment of that scale, recently, besides the already established players, so it sends a signal.”

Doubling Demand:
The wind turbine plant is scheduled to start production in the second half of 2010. “There is a dramatic need for power in India, given the population growth and industry demand that is going on,” Bolze said. “Power demand in India is expected to double between now and 2017.”

The biggest part of GE Energy’s current business in India is selling gas turbines. GE has 250 such turbines installed in India and expects another 10 to be added in the next 12 to 18 months, Bolze said. Part of that growth is driven by natural gas being piped from fields off India’s east coast.

Gas production from India’s biggest field off the east coast started in April this year. Availability of the cleaner- burning fuel may double in the South Asian nation once output reaches a peak rate of 80 million cubic feet a day, according to Oil Secretary R.S. Pandey, the Oil Ministry’s senior bureaucrat.

Consulting firm McKinsey & Co.’s estimates for India’s power demand outstrip those of GE, expecting demand for power to 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.

For more information please contact Trevor Sievert at ts@windfair.net