Green Infra shuns turnkey model favoring turbine suppliers

Green Infra Ltd is the latest Indian renewables company planning to separate project development from turbine orders for wind farms in order to leverage better deals and broaden their base of potential suppliers.

The New Delhi-based developer, which is backed by leading Indian integrated infrastructure finance player, IDFC Private Equity, seeks to bring down costs by acquiring land and clearances for new projects, tasks traditionally handled by the turbine supplier in India, Chief Operating Officer Sunil Jain told Bloomberg in a telephone interview.

Other Indian wind groups Greenko Group Plc and Mytrah Energy Ltd (formerly Caparo Energy) have also announced similar plans.

Unlike most markets, turbine suppliers in India tend to hand over completed wind farms to owners and investors, negotiating deals that include project development costs as well as turbines.

That model has benefited manufacturers such as India’s Suzlon, Spain’s Gamesa Corp and Denmark’s Vestas Wind Systems, which grabbed 54 percent of Indian installations last year. Companies that supply turbines only, such as General Electric and Siemens, did not install any machines in the country.

By handling its own project development, Green Infra will consider a broader range of suppliers, including GE and potentially Chinese manufacturers such as Sinovel Wind Group and China Ming Yang Wind Power Group.

Turbine suppliers in India are quoting prices of about 63.5 million rupees (USD1.2 million) per megawatt, Jain said. They’ve refused to lower prices despite a turbine oversupply, citing escalating project development costs, he said.

A global supply glut has driven down the price of wind turbines by 23 percent since 2009, squeezing turbine makers’ margins and intensifying competition for orders in India, the world’s third-biggest wind market, according to data compiled by Bloomberg.

“We don’t believe suppliers have the right approach,” Greenko President Mahesh Kolli said in an interview last month. Greenko signed a deal with GE to buy at least 450 MW of turbines over the next three years. That contract will supply machines that are 20 percent more efficient than the average available in the market for the same price, Kolli said.