Shift to bidding regime caused short-term pains in 2017: Suzlon CMD Tanti

Suzlon Energy CMD Tulsi Tanti says it is a temporary challenge and the company is trying to be lean and agile to tackle the drastic change in the market

Suzlon Energy, India's largest indigenous wind turbine manufacturer, is also reeling under the regulatory changes unfolding in the wind energy sector. The Union government stalled the feed-in-tariff regime to shift to competitive bidding for wind energy in 2017. This impacted the inventory and the future pipeline of major players, as the project outlook is completely dependent on the government's auction calendar. Though 3,000 Mw was tendered at record low tariffs, it failed to lift the mood of the sector. Suzlon's profits went in the red during Q2FY17. In an emailed interview with Shreya Jai, Suzlon Energy Chairman & Managing Director Tulsi Tanti says that it is a temporary phase and the company is trying to be lean and agile to tackle the drastic change in the market.

What's the outlook for the wind energy sector this year, given it faced its worst production year in 2017 with a capacity addition of 435 Mw?

Renewable energy has entered an exciting new phase and its growth is unstoppable. Once considered a niche industry dependent on government subsidies, today it is driven largely by economic realities, improved reliability and cost competitiveness backed by proven technology. Another advantage of renewables is that it is modular in nature and is scalable. We are confident that the evolving technology and economic viability of energy storage solutions, will give further impetus to renewables.

The year 2017 was a watershed year for the renewable energy industry in India, with significant policy reforms like competitive bidding in wind, record low wind and solar tariffs and the GST rollout. In addition to this, technological advancement and increased competition are steering new possibilities for clean energy.

In India, investors are bullish and excited to be part of the renewable growth story. While the wind industry’s transition to the bidding regime created short-term challenges in 2017, it laid the foundation for sustainable and inclusive growth for the sector. The wind energy industry is poised to grow to 8-10 Gw annually, with 5-6 Gw annual bidding from the central government level, 3-4 Gw capacity auctions from the nine windy states and 1 Gw capacity expected from the PSU and captive markets. This will pave the way to unlock 300 Gw wind energy potential in India and harness the latent potential of non-windy states.

What is the unsold inventory that Suzlon has currently? We have learnt that the company has laid off workers at its units and has also asked for pay cuts of executives...

The Indian wind industry is witnessing a complete overhaul with respect to cost optimisation across the value chain, specifically with the advent of competitive bidding. With declining tariffs, the cost competitiveness and efficiency becomes the key. Cost optimisation continues to remain a focus for us with an aim to substantially lower our cost structure. This has enabled us to become lean and agile, thereby accelerating decision making and implementation in a highly competitive market environment.

At Suzlon, our India-based vertically integrated manufacturing and strong in-house technology is a huge competitive advantage. Suzlon is well-equipped to capitalise on the inevitable growth of renewables, both in the domestic and international markets. Our growth strategy is based on strengthening our leadership position in India and expanding our global footprint, with a focus on select profitable markets.

Our key priorities are to leverage innovation and technology to bring down Levelised Cost of Energy (LCOE), further strengthen our capital structure and remain cost-competitive, by leveraging India as the manufacturing hub to increase our market share.

As a market leader, what are Suzlon's views for improving market conditions for wind energy?

Technology and innovation will remain the catalyst that will drive renewable energy growth. Digitisation of services, innovation in tower and blade technologies aimed at making unviable wind sites viable, ensuring better yield and increasing turbine utilisation will be the key focus areas. The industry will collaborate further to improve the supply chain, enable grid integration and leverage digital technologies.

FY18 is the only transition year. The Indian wind energy industry is shifting to a competitive bidding regime from FiT-based market. Due to administrative process stabilisation, the regulatory process, and some shift from the state level to central process there is a temporary vacuum in the market during this financial year (FY18). However, the government's focus on renewables and target of 175 Gw by 2022 and job creation remain unchanged. Hence, there is a significant growth for the renewables, and sufficient in the wind energy segment. We are well equipped to cater to the current market scenarios.