Senvion India

Will a new investor help the company achieve a turnaround?  

Consolidation has become common in the renewable energy sector with many industry players merging their operations to gain greater market share or acquiring cash-strapped firms looking to exit the market. Many such deals take place every year, but one of the most interesting deals has been the sale of the entire stake of Senvion India, the Indian arm of German wind turbine manufacturer Senvion, to Saudi Arabian conglomerate Alfanar. The industry was eagerly waiting for this update. On April 6, 2020, Senvion announced that it had signed a binding agreement with a strategic investor to sell and transfer its fully operational Indian entity. This sparked curiosity as the name of the investor was not revealed. Senvion had shared that the investor would be a global industrial conglomerate with strong engineering, procurement and construction capabilities. However, by May 2020, various media outlets reported a binding pact between Senvion India and Alfanar to offload the former’s manufacturing operations in India.

Background

Senvion, or Repower Systems as it was initially called, was established in 2001 post the merger of three small wind power companies based out of Germany: engineering consultancy Pro + Pro, and wind turbine suppliers BWU and Jacobs Energie. The initial few years for the company were successful as it launched many technologically advanced products. The reason for the initial success was its strong product development. A few years before Senvion was formed, Pro + Pro had developed the 1.5 MW high speed geared MD70 wind turbine series with the help of Jacobs Energie. In 2000, one year before the formation of Senvion, Jacobs Energie purchased the wind turbine manufacturing activities of HusumerSchiffswerft, which had filed for insolvency. The turbine incorporated the technology of pitch control, variable speed and doubly fed induction generator. At the time, this technology was futuristic and was offered by few players, thus helping Senvion carve a niche in the German wind industry. Initially, the wind industry was doubtful about the success of the MD70 prototype. However, the larger variant of the prototype with a 77 metre rotor became a commercial success. This proved to be the beginning of Senvion’s growth story. In 2002, it launched the 2 MW MM series, which became one of Senvion’s most successful wind turbine series. The series has been upgraded thrice. In 2003, Senvion launched MM82 and in 2005, MM92. After a longer gap, MM100 was launched in 2011. To counter the stiff competition from Vestas and Siemens Gamesa, it launched a larger 2.3 MW wind turbine with a 130 metre rotor. Senvion also developed multiple variants of 3 MW-plus onshore wind turbines. Since the beginning Senvion has had ambitious plans and it wanted to tap the offshore wind market as well. Initially, it worked on a 5 MW offshore wind turbine variant, and in 2017, it announced a bold plan to develop a 10 MW variant with a 126 metre rotor. The project was unfortunately stalled due to the company’s declining financial status. It would have been one of the largest offshore wind turbines of that time.

Downward spiral

In 2007, Indian wind turbine manufacturer Suzlon bought a controlling stake in Senvion for over Euro 1.8 billion. The acquisition did not bear any fruit for both companies. Suzlon had anticipated that the purchase would help in increasing its global presence and easing its financial difficulties. Unfortunately, that did not happen. On the contrary, the financial difficulties of Suzlon had an adverse impact on the performance of Senvion. The situation became worse when the few top executives of Senvion left the company. Thus, Suzlon had no option but to sell Senvion in 2015 to another hopeful investor, the US-based private equity firm Centerbridge Partners. However, the turnaround for Senvion did not happen again. The company became insolvent and had to sell its global assets to Siemens Gamesa in 2019.

Conclusion

The unpleasant experience of Senvion with different investors that were unable to help it get back on its feet has made the future outlook for Senvion India uncertain. It is too soon to predict if Alfanar – even with its deep pockets and impressive industry experience – will be able to provide a fillip to Senvion India’s growth. Alfanar has an impressive portfolio of over 1.4 GW of renewable energy projects spread across West Asia, Africa, Europe and Asia. In India, Alfanar has a wind portfolio of around 600 MW, won from auctions conducted by the Solar Energy Corporation of India. However, there were reports in May 2020 that it is planning to sell over half of its wind portfolio in India. There has not been any official announcement since then, but one thing is clear – the twists and turns in Senvion’s story are not over yet.

By Sarthak Takyar

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