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Friday, August 19, 2022

Experts: India can beat China as components manufacturer, supply chain for wind sector

This is significant in the backdrop of the Covid-19-led disruption to supply chain carrying crucial components and raw materials exported by China — the leading global supplier. The problem persisted through pandemic.

puneThe Ramco wind farm at Mupanddal at Kanyakumari, Tamil Nadu / Anjali Marar

India holds an advantageous and strategically important position towards becoming a leading manufacturer of key components required for wind energy-based power generation, experts in the field have said.

This is significant in the backdrop of the Covid-19-led disruption to supply chain carrying crucial components and raw materials exported by China — the leading global supplier. The problem persisted through pandemic.

As a result, several international companies have either shifted their base to India in the past two years or are in the process. Most want to avoid similar hiccups in future. Some industry experts claimed that the geo-political scenario in South East Asia post the Covid-19 pandemic is playing in India’s favour.

“China exported raw materials for the wind sector to India and other countries. But the pandemic exposed the high risks which companies faced for depending on one country for all its raw material supplies,” said a senior official involved in developing wind-power energy sector in India.

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Adding to the ripples created by the pandemic was the six day-long blocking of the Suez Canal in March 2021, by the Ever Given, a container ship traveling from China to the Netherlands. This had left stocks stuck in the sea leading to price escalation. “Many of the wind turbine’s blades, small components meant for the on site installations shipped by Danish companies, were stuck. In the process, numerous projects got delayed and the costs spiked,” the official said.

That further prompted more companies to shift their base to India, particularly in Tamil Nadu. During the course, they began to work on developing their own region-specific supply chains and Tamil Nadu has been a successful host, by far.

“The arrival of new companies in Tamil Nadu is testimony to prove that India is providing the required ecosystem. Also, the geo-political equations in the region are currently in India’s favour. As a result, the companies are confident of designing better supply chain mechanisms. India, hence, has a potential to become a manufacturing hub of components required for the wind energy sector,” Francis Jayasurya, India director, Global Wind Energy Council (GWEC), a global trade council for wind industry.

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For instance, the foundry of Baettr India in Chennai has been set up to cast and paint wind turbine components for the Asian markets. The first components were cast in early 2022.

Another new entrant to India is the Danish company, Lind Jensen Machinery (LJM), that is primarily into manufacturing hydraulic cylinders. Last month, LJM opened its second Asian factory, in Chennai. Its Asian operations had begun from China. The LJM aims to manufacture key components such as accumulators, lock cylinders and hydraulic pitch for the wind turbine industry. The company’s investment on this project is estimated to be two million Euro.

Moreover, experts feel that the newly formed Indo-Pacific Economic Framework for Prosperity (IPEF) of 12 countries, may pave the way for the development of the sector in India. The IPEF, which is led by the US, will work on energy and three other key areas. India is a member of the consortium involving Australia, Brunei, Indonesia, Republic of Korea, Malaysia, New Zealand, Vietnam, Philippines, Singapore and Thailand. The group will compete with the major player in the region – China, said the experts from the industry.

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Although Prime Minister Narendra Modi had, at the COP26 last year in Glasgow, pledged the generation of 500 Giga Watts(GW) power from non-fossil sources and renewable energy, experts feel that India needs a significantly higher investments to boost power generation from renewable energy sources.

Vibhuti Garg, from the Institute for Energy Economics and Financial Analysis (IEEFA), recommended designing long term infrastructure bonds lasting 15 to 20 years to attract better investments.

Garg said, “The country’s current investment is 10 to 15 billion USD/year. But, ideally it should be anywhere between 30 to 40 billion USD, annually. Also, the government needs to design a circular economy to make renewable energy sustainable.”

The state governments and the Central government should work in tandem to create a conducive atmosphere or ecosystem for the new players and mid-level companies in setting up their plants in the country, said the experts.

“The existing policies laid down by the Central and state governments along with individual state electricity boards are going against the small companies,” they claimed. These are posing difficult situations for the beginner and mid-level companies eyeing business across potent sites for renewable energy located in Maharashtra, Gujarat, Rajasthan and Andhra Pradesh apart from Tamil Nadu.

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Tamil Nadu alone contributes one quarter of 40.35 GW installed capacity in the country. It is the largest contributor among the seven states in installed renewable energy.

“However, the companies are now moving to Gujarat as they can buy land at affordable rates than Tamil Nadu, where rates are higher and potent land is shrinking,” said the experts.

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For example, two acres of land is required for erecting a wind turbine. Each turbine can cost anywhere from a few lakhs to Rs 3 crore as turbine installation costs are height and capacity dependent. In India, the commonest heights of the turbines range from 30 to 70 metres and have capacities 200 Kilo Watts (KW) to 1,650 KW. But for better power generations, companies in Tamil Nadu have started dismantling shorter turbines and taking them over 100 metres. It is hence a misconception, experts say, that power generated from renewable sources like sun and wind are cheaper than the conventional hydro or coal-based sources.

(Anjali Marar was selected for a workshop on Renewable Energy in Kanyakumari, organised by the Earth Journalism Network)

First published on: 26-07-2022 at 03:48:35 am
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