Siemens Gamesa

Navigating the Indian wind energy market

Global wind power capacity reached 837 GW by the end of 2021, according to the latest estimates by the Global Wind Energy Council. Roughly 94 GW of new installations took place in 2021, including 73 GW of onshore wind capacity. China, the US, Brazil, Vietnam and Sweden emerged as the top markets for onshore wind capacity deployment, while India lagged behind in the eighth position with just 1 GW of installations. The second wave of the Covid-19 pandemic, along with the inherent problems of transmission and land constraints, price sensitivity, and regulatory issues continued to impact capacity addition. However, India continues to maintain its position as the fourth top global market, contributing to 5 per cent of the total onshore wind capacity deployed worldwide.

A leading global player in the wind space is the Spain-headquartered Siemens Gamesa Renewable Energy (or simply Siemens Gamesa), which brings roughly four decades of experience in the wind industry and caters to the onshore, offshore and service markets. It has reportedly deployed a massive 120 GW of wind turbine capacity across 90 countries.

Background

Siemens Gamesa has an interesting history. Gamesa was incorporated in 1976 under the name of Grupo Auxiliar Metalúrgico. At the time, it worked on the management of industrial projects and technology for emerging businesses. Gamesa did not enter the wind power space till the 1990s, and set up its first wind project in Spain in 1995. By 2008, the company had opened manufacturing units in the US, China and India, and shut its aerospace division to focus on renewable energy. In 2015, Gamesa entered India’s solar business and also created Adwen, a joint venture in the offshore space.

Meanwhile, Bonus Energy (later acquired by Siemens), which was founded in Denmark in 1980, built its first 22 kW wind turbine in 1981 and started delivering turbines to America around the same time. Bonus Energy was acquired by Siemens in 2004, by which time the former had installed 3,321 MW of capacity in 20 countries. These two companies, Siemens Wind Power and Gamesa, came together in 2017 and concluded the merger of their wind power businesses in April. According to the new company, merging these two companies with complementary strengths and experience allowed them to diversify in terms of geography as well as business. The new company, Siemens Gamesa, is based in Zamudio, Spain, and trades on the Spanish stock market.

In India, the company has one blade factory in Nellore (Andhra Pradesh), a nacelle factory in Mamandur (Chennai, Tamil Nadu), and an operations and maintenance centre in Red Hills (Chennai, Tamil Nadu). The company’s installed base in India recently crossed the 7 GW milestone, as per a December 2021 announcement.

New turbine orders

According to Siemens Gamesa’s recent financial disclosure, released in May 2022, the company obtained onshore wind turbine orders amounting to 4,773 MW between March 2021 and March 2022. This marks an annual decrease of 43 per cent year on year. Recent months have witnessed demand for wind turbines with capacities equal to or greater than 4 MW, showing an increasing preference for bigger turbines with higher capacities. The quarter ended March 2022, in fact, saw more than 60 per cent of the orders for the Siemens Gamesa 5.X platform.

Meanwhile, on the offshore wind side, the company has signed its first firm contracts in the US. In November 2021, it also announced plans to develop its first US offshore wind turbine blade facility in Virginia, upon the execution of a firm order for the 2.6 GW Coastal Virginia Offshore Wind Commercial Project with Dominion Energy. This facility will execute the finishing of patented Siemens Gamesa Offshore Integral Blades. Further, in the quarter ended March 2022, the company signed two preferential supply agreements for a total capacity of 1.4 GW for the MFW Baltyk II and III wind offshore wind farms in Poland. Siemens Gamesa is reportedly working with its clients to prepare for the large auctions expected in this space in the near term.

In India, specifically, Siemens Gamesa has secured substantial new orders from two major IPPs in the past few months. Recently, it received an order from Ayana Renewable Power Six Private Limited to supply wind turbines for a 302 MW project. The project is located in Gadag district, Karnataka, and Siemens Gamesa will install a total of 84 units of the SG 3.6-145 wind turbine, which is designed for Indian wind conditions. This project was awarded to Ayana as part of the Solar Energy Corporation of India’s interstate transmission system Tranche X wind auction. Further, in July 2021, Siemens Gamesa secured two significant turbine deals with ReNew Power for the latter’s upcoming wind power projects in Karnataka. This would require Siemens Gamesa to supply 93 units of its SG 3.4-145 wind turbines for the 322 MW wind project in Tondehal, and 87 turbines with a total capacity of 301 MW for a wind project in Hombal. Thus, in total, it will supply 180 of its new wind turbines to ReNew Power’s projects, amounting to a total capacity of 623 MW. The ReNew Power deals mark the first orders for the company’s new 3.X platform wind turbine model, which is designed for the Indian market.

Siemens Gamesa launched the new 3.X platform turbine in 2020 amidst the pandemic, and has a total order intake for 925 MW (combining the Ayana and ReNew Power deals). These turbines will be supplied from the manufacturing plants in India, contributing to the Make in India agenda of the Indian government.

Technology focus

Unlike Europe and other high wind speed markets, India mostly has low to medium wind sites. To cater specifically to these wind speeds, Siemens Gamesa launched its next-generation wind turbine, the SG 3.4-145, in India in 2020. This new turbine is an extension of the Siemens Gamesa 3.X platform and is manufactured locally at the company’s manufacturing facilities in India. The SG 3.4-145 incorporates the 145 metre rotor of the Siemens Gamesa 4.X platform. This reportedly increases the swept area by 41 per cent and annual energy production by 48 per cent, compared to the previous SG 2.2-122. The turbine height is 127.5 metres, and it is based on the SG 3.4-132 turbine, several gigawatts worth of which has already been installed worldwide. The SG 3.6-145 wind turbine is an extension of the SG 3.4-145 model. The product has been designed to comply with the global International Electrotechnical Commission System for Certification to Standards Relating to Equipment for Use in Renewable Energy Applications and meets the India’s Central Electricity Authority’s 2019 requirements as well.

In 2020, Siemens Gamesa added a new turbine to its 4.X platform, the SG 4.7-155, ideal for low wind sites. This turbine has a 155 metre rotor and a nominal power rating of 4.7 MW. However, it can operate between 4 MW and 5 MW of power, based on the project site, as it uses OptimaFlex technology. The turbine reportedly has a low noise output as well, making it ideal for markets that have stringent noise-related regulations. With the global focus on a circular economy, recycling of wind turbine equipment is also gaining importance. To this end, Siemens Gamesa aims to make its turbines totally recyclable by 2040. It has developed a blade cast in resin that allows the separation of the blade materials from the resin at the blade’s end-of-life. The company plans to use these blades at Germany’s Kaskasi offshore wind power plant.

Apart from wind power, the company is heavily exploring opportunities in the hydrogen space. It released a white paper in June 2021 titled “Unlocking the Green Hydrogen Revolution”, which is a roadmap for driving down the cost of green hydrogen production within the next decade. According to this white paper, green hydrogen based on onshore wind can achieve cost parity with conventional hydrogen by 2030. Cost parity can be achieved by 2035 if offshore wind is used. However, this requires appropriate policy frameworks and market mechanisms to be in place. Marking a major milestone, Siemens Gamesa recently developed a wind-to-green hydrogen project in Denmark, which is reportedly the world’s first such project, in “island mode”. The hydrogen produced from the Brande Hydrogen pilot project is distributed to hydrogen stations by the project partner, Everfuel.

The company is also working with Siemens Energy to develop solutions to fully integrate electrolysers into offshore wind turbines to directly produce green hydrogen. The green hydrogen market is set to explode in the coming years, and the synergies with offshore wind make it an attractive proposition. Such innovations, especially in the area of wind-to-hydrogen, will help Siemens Gamesa maintain its strong position in the overall wind power market.

Outlook

The lingering effects of the pandemic, global supply chain disruptions, volatility in commodity markets, regulatory uncertainty in various markets and changing geopolitics continue to impact large wind turbine manufacturers across the world. On the one hand, there is greater focus on energy security following COP26, and with the recent energy crisis brought on by the Ukraine-Russia war. On the other hand, there has been a significant regulatory flux in many leading wind power markets, which has impacted wind capacity deployment and thus, new turbine orders.

However, these disruptions are temporary, and the long-term outlook remains positive for Siemens Gamesa, with its decades of experience, a global portfolio and focus on innovation against the backdrop of energy transition acceleration.

By Khushboo Goyal

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