The evolving wind energy landscape in India has opened up an interesting mix of challenges and opportunities for original equipment manufacturers (OEMs). Renewable Watch recently spoke to Gilan Sabatier, general manager, business operations, South Asia, GE Onshore Wind, about the company’s response to an evolving wind market, the key focus areas and its future plans for India. Excerpts…
How has the introduction of competitive bidding changed the country’s wind energy landscape?
The transition to a competitive bidding regime is not unique to India. This is the trend in other geographies as well and marks an evolution towards a more competitive regime. In India, it has rendered the overall sector more competitive. The intent is to make sure that there is a level playing field while trying to achieve the lowest cost of electricity possible for consumers.
The auction regime is today’s reality. Therefore, it is up to the participants to adapt to this new reality. This essentially translates into the need to bring the best technology, comprehensive solutions and financing to be able to win in this new framework. This is the trajectory we are on, both as a company and as a participant.
Where do wind industry manufacturers’ profit margins stand currently?
We need to continue to deliver competitive solutions. That is the reality facing the entire supply chain, including OEMs. GE has adapted to the new normal by putting an emphasis on innovation and low-cost, high-output solutions.
How are you planning to bring these innovations to India?
GE is uniquely positioned because of its strong presence and large installed base. We have developed a new low wind speed turbine that is designed in India, for Indian wind conditions. It is a 2.5 MW machine, with a 132 metre rotor. Our turbine gives customers as much as 20 per cent increased production under the same wind conditions, creating a technological differentiating factor. We have expanded to balance of plant as a turnkey offering for our customers.
With competition increasing, do you expect capital costs to reduce? If so, by how much?
The name of the game is levellised cost of energy (LCoE). Effectively, what we are aiming at, and what we believe the industry needs to aim for is the lowest cost of electricity. So, it becomes an equation amongst the capex, the output generated and the cost to actually finance that capex. We need to reason on all these levels to deliver the lowest LCoE. It is the equation solved for just one outcome – what is the cost of each kWh being generated.
With 20 GW of capacity to be auctioned over the next two years, how does GE plan to tap this opportunity and tackle competition?
The past 24 months have shown that the region is evolving. The target is quite clear in terms of achieving 60 GW by 2022. Considering the present installed base, we need to maintain the annual level of auctions as specified by the Ministry of New and Renewable Energy, to hit the target. Fundamentally, what we, as participants, care about is not only the volume but also the frequency of the auctions. Meanwhile, certainty and visibility over the next couple of years in terms of volume are important so that we can make decisions about technology and investments.
What, according to you, will be the auction trajectory beyond 2020? Will we go beyond 10 GW per year or will the figure reduce?
Targets are useful and auctions are a means to achieve those targets and secure big volumes. Onshore wind will welcome new and more ambitious targets. Our responsibility is to make sure that the technology is kept as competitive as it can be vis-à-vis other sources of generation. If wind energy is a competitive source, there will be a natural incentive to make sure that we have as much deployment of it as possible.
Which states are likely to conduct auctions in the coming years, given that we have so far had auctions in only Gujarat, Tamil Nadu and Maharashtra?
Each state determines its energy requirement, leverages learning from other wind-rich states and strategises accordingly. It would be good to have clarity on volumes and for states to specify their auction plans. It is not so much about which states are in and which are out, but about giving the industry visibility on what the potential is likely to be in those states.
What are the trends in technology innovations and what will be GE’s focus areas?
Technology improvement allows one to increase competitiveness. Having the best turbine offering is critical and that is what we strive for consistently. The other side of the technological argument is that renewable energy is still intermittent. The next technology frontier that we are going to be focusing on is hybrids. Hybrids could mean solar and wind together; solar, wind and storage; and even wind and storage. The main purpose of this innovation is to try to increase the number of hours that renewable energy can be generated for, and ultimately have 24×7 renewable power. That can be done by leveraging the hours of the day when there is no wind but the sun is shining, or vice versa. These are the natural complementarities that one can capture. In addition, with a good storage solution, one could capture power when it is not needed and reinject it into the grid when required, allowing one to have despatchable renewable energy. We are bringing in GE’s best in terms of innovation for India to be able to, over time, offer firm renewable power.
How has GE’s offshore experience been in other parts of the world? What has been the cost experience in terms of pricing and tariffs? What are the learnings for India?
Offshore wind is one of the fastest growing segments in renewable energy today. It has moved beyond being Europe-centric to a global renewable source of energy. What was once a niche technology is now becoming a well-established global offering, with very few players offering the required technology. GE recently announced the most powerful offshore turbine in the world, a 12 MW turbine with over 100 metre long blades. This is the right time for India to leverage offshore wind power. It has potential and will benefit from all the technological advantages that have been developed in other regions. However, there is still a lot of work to be done on project execution and technology suitability. But, overall, it is very promising and something that we are keeping a keen eye on to actively participate in.
We are actively promoting the 12 MW offshore wind turbine in Europe and the US. The right technology depends on the wind conditions. As we learn more about which are the projects being developed, we will bring the technology that is the most suited for India.
Which are some of the emerging markets for GE aside from India?
The next frontier is Southeast Asia. Countries like Vietnam, Thailand, the Philippines and Indonesia are the ones where renewables, wind in particular, are going to play a major role. Indian players are well placed to enter these regions and apply their learnings to develop projects. We are also investing significant amounts in the region, in technology and in increasing our industrial footprint. It is one of the key focus areas for us globally.
What are your future plans for India, in particular in manufacturing?
GE has been in India for a hundred years and has a substantial wind footprint. We will continue to make investments in technology, supply chain and talent at our manufacturing units.
What are your expectations from India for 2018 and 2019?
We are hopeful that the auctions that are announced will happen in due course. We have been getting tremendous feedback from customers on our products.