Wednesday, August 27, 2008

India's Wind Power Giant Faltering

India's Suzlon Energy (SUZL: BSE), with 8% market share of wind turbines in the US, is beset by quality issues at home and abroad, according the Wall Street Journal.

Suzlon Energy, with market cap of INR 270B, is a wind power company in India. In terms of market share, the company is the largest wind turbine manufacturer in Asia and the fifth largest worldwide. With headquarters in Pune it has several manufacturing sites in India including Pondicherry, Daman, Bhuj and Gandhidham as well as in mainland China, Germany and Belgium. The company is listed on the National Stock Exchange of India and on the Bombay Stock Exchange.

The window of opportunity for Suzlon opened up with growing demand for green energy amid global-warming fears and the soaring cost of oil, coupled with shortages of turbines from more established players. The company's less-expensive turbines raised hopes for a reduction in the cost of wind power, which currently is subsidized in many countries, including the U.S.

Suzlon's problems in India come as the company also is stumbling in the U.S. Blades on turbines sold to U.S. customers Deere & Co. and Edison International's Edison Mission Energy began splitting last year, leading to a blade recall for strengthening. Indian customers say the turbines have technical problems that make them vibrate excessively when operating at high wind speeds. Some turbines have run out of control in strong gusts, leading to generator blowouts and blades splitting.

The Wall Street Journal reports that Madras Cement has bought 36 units of Suzlon's 1.25 megawatt turbines since 2003. A.V. Dharmakrishnan, executive director of finance for the Chennai-based company, says excessive vibrations at high wind speeds, forcing turbines to run below capacity, are costing the company about $4 million in lost power this year. "The turbines are not capable of producing [electricity] even when the wind is there," he says.

Speaking to Wall Street Journal, Suzlon spokesman Vivek Kher denied the company's turbines have experienced technical problems in its home market. Any drop in performance, he said, is because of falling wind speeds in India in the past couple of years and regular problems connecting to India's shaky electricity grid, which frequently causes turbines to shut down. "There are many companies who are extremely happy with their investment in Suzlon wind turbines," Mr. Kher said.

These latest reports are clearly a blow to a rising Indian company at the forefront of the green energy revolution. How it addresses these issues will clearly determine its future.

The Suzlon shares closed at INR 207.45, down 1.55 from the opening bid of INR 209.00 in latest trading. However, Suzlon is down more than 50% from its 52 week high of INR 460 hit on Jan 9 of this year.


Anonymous said...

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Zaheer Iqbal Naru said...

chakday india

libertarian said...

Thanks for an informative post on Suzlon. They can still get this right if they tackle their quality issues right away. However, they've blown a lot of the credit they got early on.

Riaz Haq said...

Received from Saleem Mastan:

pl read/see this URL

we with Hummer products can beat any product in price and performance,

We will be manufacturing the products pretty soon .


Mavin said...

Suzlon is an amazing company which has grown dramtically in the face of extremely hostile competition from European majors.

The current problems that seem to be facing obviously has impacted their stock market performance but also given rise to a vague feeling of unease re:their claims of superior technology.

One one hand they have tried to remain ahead of the technology curve by taking over some hi-tech European firms but on the other hand they have yet to integrate all these systems.

I sincerely hope, Mr. Tulsi Tanti and his senior management apply their mind and overcome these technical issues.

I have been fortunate to observe their team at close quarters and I believe that they are smart enough to understand the implications of cutting corners.

It will be tragedy if they don't.

Riaz Haq said...

"Vivek Kher denied the company's turbines have experienced technical problems in its home market."

Arguing with customers is not a good start. However, if Suzlon can deal with the quality issues effectively, it can emerge better and stronger from this crisis.

Riaz Haq said...

Here's an email commentary I received from an industry observer in California:

There are several inherent problems with the wind power tecchnologies.

1) The cost of asynchronous generators is very high.
2) The failure rates of turbine blades due to bird strike is significant.
3) If everything runs normally, the wind turbines never achieve more than 25% of their rated output.
4) Wind is unreliable - low winds mean no or lesser power, high winds mean more damage to turbines.
5) Selling to individual consumer is a stupid idea because they cannot achieve the economy of scale and the "stable uniformity" that a large wind farm must provide.
6) I have experience with Indian technology (Rapiscan x-ray scanners), and it sucks shit. Wind turbines cannot be any different. What the world forgets is that Indians are good as individual engineers but their system sucks and their group products suck worse.


Wind is FREE,

100% available ,

Electricity is free

Bijli aah gai

we at EES in Pakistan have started ,

one can buy it today world wide,
see our website

This is the cheapest form of energy

A 1 Kwan wind turbine which is good enough for the following appliances
1. 20 saver bulbs which have replace the 100 watt old bulbs
18kwx20= 360watts
4 fans, 40x4= 160watts
1 TV= 140 watts
1 computer = 40 watts
I fridge = 80 watts

Total watts 780 watts this is good for any home in the Pakistan India or any place where there is wind
Karachi, Bombay, Pune, Rajasthan, Sind, the whole coast of India, Pakistan and many countries of the world can use a small wind turbine

If one goes on Google and searches for a watts on an appliance you can get it too.
5000 watts
Electric oven

5000 watts
Clothes dryer (electric)

3800 watts
Water heater (electric)

3500 watts
Central Air Conditioner (2.5 tons)

1500 watts
Microwave oven

1500 watts
Toaster (four-slot)

900 watts
Coffee maker

800 watts
Range burner

500-1440 watts
Window unit air conditioner

200-700 watts

60-100 watts
Light bulb (energy hog because houses have lots of lights, and it's easy to leave them on when they're not being used)


100 watts
Floor fan or box fan (high speed)

15-95 watts
Ceiling fan (Bigger fans and faster speeds use more energy. My 2004 42" Hampton Bay uses 24/28/42 watts on low/med/high respectively, according to the manual. Progress Energy says on high speed fans use 55/75/95 watts for 36"/48"/52" models respectively.)

Computers (see more about electrical use of computers)

140-330 watts
Desktop Computer & 17" CRT monitor

1-20 watts
Desktop Computer & Monitor (in sleep mode)

120 watts
17" CRT monitor

40 watts
17" LCD monitor

45 watts
Laptop computer


60-100 watts
Regular light bulb

4-165 watts
Video game (While playing game, 30W for PS2, 70W for XBox, and 165W for XBox 360. See full report at DX Gaming)

55-90 watts
19" television

18 watts
Compact fluorescent light bulb

4 watts
Clock radio

After doing tests ourself in Karachi and having installed small wind turbines we now know that wind is available and it is very high speeds.
There is enough wind to run 12 months; this talk of 30% effiency has no meaning,
Is a 1 kW turbine runs for 365days and gives 1kw out put for a home that is 100% effiency
a stand alone system with deep cycle battery’s which last for 8 hours and delivers 1kw then this saying 30% does not hold any validity, that 30% is for a wind farm where there are no battery backup.
A wind turbine charges a battery bank like a UPS and if there is no wind the homeowner use it from the battery backup so has 100% electricity, the whole year around.

A 1 kW turbine cost $3000 with battery back up and if the customer pays 20% down and pays $52 or Pak Rs 3750 for 48 months the he electricity is free

When he is paying to the bank he does not have to pay to Wapda, KESC or the utility company or buy diesel, as he is getting free electricity from the turbine thru the battery’s bank

We are presently marketing them in Pak. Next step is UAE, India,and USA.
Wind is cheap and Free

Using local talent we put up a wind turbine on a bill board on Korangi Road in Karachi, it is running non stop for the last month and a half.
we put a 5KW turbine at a height of 100 feet , since the bill board is high, one does not need such heights an winds on coastal areas are very good at low heights also
pl see the utube

salim mastan

Riaz Haq said...

More bad news for Suzlon.

Suzlon Energy Ltd., the world's fifth-largest wind-turbine maker by unit sales, is facing additional questions about its technology after a 140-foot-long blade broke off a tower in Illinois.

News of the blade detachment, at a project financed by Deere & Co., drove Suzlon's shares down 39% to 47.25 rupees, or 93 U.S. cents, Friday in Mumbai trading.

According to a report in Wall Street Journal, The accident is the latest in a series of cracking windmill blades and other technical problems in the U.S. and India that have hurt Suzlon's image. It has been forced to scrap a $390 million share-rights issue because of the stock-market slide. Suzlon needs the funds that the rights issue would have raised to complete a takeover of Germany's REpower Systems AG. That move is considered key to assuaging investor fears about Suzlon's technological capabilities following a number of turbine-blade failures at U.S. installations.

In a statement, Suzlon said the Illinois incident was "extremely rare and unusual." The company added, "Other turbines owned by that customer and our other customers at various locations in the U.S. are operating without interruption." It gave no further details.


Blades are like tires of a car,
made by some vendor.
If blades on some turbines fail , they can be fixed or replaced,
It is not a big issue,

Salim Mastan,

Riaz Haq said...

According to Wall Street Journal, Suzlon has gotten plenty of attention for its turbine troubles–and it has suffered from turbine breakdowns, cracked blades, and turbine underperformance that have driven customers to cancel orders–but it isn’t entirely alone. All turbine makers have at one time or another have wrestled with technical glitches in the complex machines. Vestas of Denmark, the world’s biggest turbine maker, has had a few turbine failures as well. A Siemens turbine collapsed last summer, killing a worker in the U.S. Other power sources, such as nuclear power, are still dogged by safety scares, like the evacuation this week of the Vermont Yankee reactor, or the conviction handed down in the case of an Ohio nuclear plant that had a hole in it.

Accidents do matter, especially if a massive blade breaks and hurts someone on a neighboring farm. It's a major liability issue for manufacturers and customers. Suzlon, and others, have to improve quality and reliability of their blades and turbines to reassure customers for wind power business to continue to grow.

Riaz Haq said...

Jan, 2009: The world’s fifth largest wind turbine maker, Suzlon Energy, has agreed to sell about 10% of its equity stake in gearbox designer Hansen Transmissions to Ecofin, a London-based investment firm which specializes in the utility and infrastructure sectors. Suzlon says the sale is part of its strategy to finance future growth plans.

Anonymous said...

Agree with Mr. Haq on Indian products. They make every thing from a pin to a plane and it is their strength in a vacuum in a closed economy that India is. But when it comes to their use in International Markets it indeed sucks. But don't worry India will be right there sooner than later. They are not saddled with a feudal system like we are. They have land ceiling 56 acres max. for any person and 14 acres max under a canal. This has helped more people to get better self employed and hence educated also. Like once Japanese products were frowned upon and now they are premium products. What Pakistan should do is immediately introduce land ceiling, free the country from the shackles of the feudals, throw commoners in the National and Provincial Assembles so that tha country is governed efficiently and without the shortsightedness of these land lords. People love Pakistan but the feudals love their wealth and lands and their slaves.

Riaz Haq said...

Here is a report on the cost of wind turbines in 2011:

Wind energy, it appears, has never been so competitive. Prices for wind turbines last year dropped below €1 million ($1.36 million) per megawatt for the first time since 2005, due largely to over-capacity, greater manufacturing efficiency and increased scale, according to the market researcher Bloomberg New Energy Finance.

The group’s most recent Wind Turbine Price Index, based on confidential data provided by 28 major purchasers of wind turbines, shows that prices remain under pressure in most parts of the world. The survey includes more than 150 undisclosed turbine contracts, totaling nearly 7 GW of capacity in 28 markets around the world, with a focus on Europe and the Americas.

While the news is good for wind farm project developers hoping to save money, it’s troubling for manufacturers and component suppliers trying to make money – they have seen their margins shrink over the past couple of years. Global turbine contracts signed in late 2010 for the first six months of this year averaged €980,000 per MW, down 7 percent from €1.06 million per MW in 2009 and a peak of €1.21 million in 2008 and 2007.

All manufacturers covered by the survey showed “aggressive pricing, according to New Energy Finance, which was acquired by Bloomberg in 2009. Low-priced power-purchase-agreements in markets exposed to competitive electricity prices – rather than fixed feed-in tariffs – appear to have put additional pressure on turbine contracts. Average prices in Italy, the United Kingdom and the United States were well below €1 million per MW for contracts signed in 2010 and slated for delivery in the first half of this year.

The cost of electricity generated by wind is now at record low levels, according to the survey. “For the past few years, wind turbine costs went up due to rising demand around the world and the increasing price of steel,” Michael Liebreich, chief executive of Bloomberg New Energy Finance, said in a statement. “Behind the scenes, wind manufacturers were reducing their costs, and now we are seeing just how cheap wind energy can be when overcapacity in the supply chain works its way through to developers.”

Overall, the annual 2010 global wind market shrunk for the first time in two decades, down 7 percent from 38.6 GW in 2009 due mainly to a disappointing year in the U.S. and a slowdown in the Europe, according to figures released earlier this month by the Global Wind Energy Council. The U.S. which is traditionally one of the strongest wind markets, saw its annual installations drop by 50 percent from 10 GW in 2009 to just over 5 GW in 2010, GWEC said in a statement.

“Our industry continues to endure a boom-bust cycle because of the lack of long-term, predictable federal policies, in contrast to the permanent entitlements that fossil fuels have enjoyed for 90 years or more,” Denise Bode, CEO of the American Wind Energy Association, said in the same statement.

GWEC secretary general Steve Sawyer believes 2011 will be better. “Orders picked up again in the second half of 2010 and investments in the sector continue to rise,” he said.

On that note, French manufacturer Alstom won a contract this month from Traianel to build Germany’s 80-turbine Borkum West II wind farm offshore farm. The project is scheduled for completion in March 2012.


jatropha biodiesel is the way to go
salim mastan

Riaz Haq said...

No source of energy is without risks, including wind. Here's an excerpt from a San Francisco Chronicle report:

The long hot summers of the San Joaquin Valley suck great tsunamis of cool coastal air through the Altamont Pass, producing winds so powerful that a person can lean nearly 45 degrees without falling down.

Such awesome force gave birth in the early 1980s to the world's largest collection of wind turbines, pioneers in what is now America's fastest-growing form of renewable energy and an increasingly important weapon in the battle against global warming.

But the Altamont Pass Wind Resource Area is also a symbol of the wind industry's biggest stain - the killings of thousands of birds, including majestic golden eagles, by turbines. The result has been a wrenching civil war among those who are otherwise united in the struggle to save the planet and its creatures.

It's been nearly a year since a controversial legal settlement was forged among wildlife groups, wind companies and Alameda County regulators. That agreement, opposed by some parties to the dispute, promised to reduce deaths of golden eagles and three other raptor species by 50 percent in three years and called for the shutdown or relocation of the 300 or so most lethal of the approximately 5,000 windmills at Altamont.

Saleem Khan said...

Mr. Saleem Mastan now everybody claims to be the sole distributor of Hummer. You have promoted it for nothing. Now Hummer writes that they have so and so as the sole agents and you are no where there. Wasn't it so foolish to promote them. On top of it you are going to manufacture. I am sure you were joking. Couldn't have been serious. That is the worst product technically and you want to promote it. Wake up Mr. Saleem wake up.