Tulsi Tanti | I Chairman and Managing Director, Suzlon Energy Ltd
When do you see Suzlon on a sustained profitability path?
During the last financial year, we posted profits and expect to do so, this year too. We will now continuously be on the profitable path because we have brought down some fixed costs. Also, when we plan to add over 1,000 MW a year, we will always be in profit. The market is growing at 30 per cent and we are growing above the market levels. We have brought in more efficient products which give 15-20 per cent more energy, even as turbine costs go up only by 5 per cent, it will add to our profits. Considering quarter-on-quarter, from the second quarter onwards volumes pick up, and on a half-yearly or an annual basis we will always be in profit. Last year after paring debt we adopted a new accounting calendar. Most of the debt repayment schedules are not up in the next three years. After that, in the next five years we have to repay debts. So, most of the repayments are back-ended. Now we are generating cash from operations. With investment in technology and market expansion we can make it more commercially and economically viable.
How is Suzlon countering challenges in the industry?
The Indian electricity market is very promising and in a demanding situation because GoI had set 60 GW target for wind. The market is expected to grow by 30 per cent YoY. To execute such a large project across India, we need technology in two aspects - one is, now the best sites are exhausted and we need to utilise low wind sites. We also need to keep in mind the declining tariff. PPA tariffs are going below `5/kWh. Because of these two challenges it is becoming extremely important for us to invest in technology and that is why we have developed S97/120m tower with 35 per cent PLF. This will give us a competitive edge. Now, we have introduced air stripper wall S111/120m (111 metre turbine on 120 metre tower), which is going to deliver almost 40 per cent PLF. It may increase our technology choice and as the cost of inputs come down, the price will come down. This is the biggest technological change we are bringing in, so that hitherto unviable projects also will become viable. We are developing R&D in Germany, Netherland and Denmark, besides India, so that we can continuously deliver advanced technologies to make more and more projects viable.
The S111/120m turbine is a prototype and the process of verification, testing and monitoring will be completed by September and will be offered during the current financial year to our customers.
You are entering into solar technologies. Can you give us a sense of how your targets are and how you are going to integrate both solar and wind power?
The country´s target of renewable energy is 175 GW, out of which 100 GW is solar, about 40 GW of which is rooftop and 60 GW is utility scale projects in solar. Blending both wind and solar is the need of the hour for the country which is planning to offer 24-hour power supply. From 9 am to 5 pm solar gives more energy, during which wind energy production is low. As such they are complementary to each other. If the 100 MW of grid is built for the same level of capacity, the generation may not reach that level in case of wind and solar. Wind gives up to 40 per cent of plant load factor (PLF), while solar gives about 20 per cent of PLF. So both are complimentary and can be used together for optimisation of grid. Thus, integrating the two technologies is strategically important for the country. As far as our involvement is concerned, we will only be in project integration, project execution and EPC, for solar projects and we are not going to manufacture any of the panels or other products ourselves. We are targeting 300 MW of solar projects, including 210 MW in Telangana and 75 MW in Maharashtra.
These two are not hybrid (having both wind and solar combined) projects. The first hybrid project we are developing in Rajasthan next year. We are planning a 500-MW project, of which 250 MW is solar. Out of that 200-300 MW we will complete next year. Planning of infrastructure and project planning we are doing at the moment for the Rajasthan project.
How the bidding system helps bank funding of wind projects?
Every state has these feed-in tariffs. CERC is monitoring that system. Based on the costs of inputs and all the new tariff is decided. It is a well-established system. Through that quality projects is ensured. Otherwise a lot of banks will not be comfortable in funding the projects as a lot of risks are involved. There is no recourse to a banker. There is no security from the promoter or financier, only project´s cash flow is the basis for funding. The way projects are being bid aggressively, the project may not be viable at times. In such cases, the bank is not financing the project. Ultimately, the country needs investment for increasing of capacities.
Which state is likely to add more capacity this year?
I think India will add 30 per cent of new capacity this year. It was 3400 MW of capacity that was added last year. For this year, we are predicting that it will be about 4,500 MW of addition if the plans are fully delivered. There is a lot of speculation whether this capacity will come on board or not, but different projects are under construction in different states. The majority of the capacity will come up in Andhra Pradesh, followed by Gujarat, Madhya Pradesh, and Karnataka, Rajasthan and Maharashtra lead the pack in building of in captive power capacities. By this way about 4.5 GW of capacities will come up during the current financial year.
Last year you have talked about monetising your manufacturing sites. There is a talk that you are looking at monetising the large land bank you have?
Whatever we are planning is for building a project pipeline and the capacity building will continue. There is no need for monetisation for the sites.
- JOCELYN FERNANDES