Indian Wind Energy Giant Suzlon Could Invest $1.6 Billion in UK Factory

domestic wind turbine

India’s largest wind turbine manufacturer Suzlon Energy is in talks with British officials to invest $1.57 billion to build a wind turbine manufacturing facility. While the details about the talks are still sketchy, such an investment makes perfect sense for the company. Sulzon Energy (NSE:SUZLON) bought European wind energy major RePower in December 2009 to expand its presence in developed countries. The acquisition helped Suzlon grab almost 10 percent of the global market share and made it the third largest wind turbine manufacturer. Suzlon is already the market leader in Asia. Founded in 1995, Suzlon has pioneered in manufacturing low-cost turbines and has expanded operations in North and South America, Europe, Asia and Australia. Over the years, the company has made several acquisitions in order to build an integrated supply chain to provide complete wind energy solutions. Suzlon has made the most from the consistent growth of wind energy infrastructure development in India and the company continues to hold a strong order book. However, the company did face problems as it ventured into new markets like the United States. In 2008, the company suffered a major setback when several instances of blade failures were reported in the turbines it had exported to the US. Consequently, the company saw many orders cancelled or truncated and its stock took a steep plunge. Suzlon invested more than $100 million to retrofit these blades. The company has been facing fierce competition from the Chinese manufacturers which have sprouted during the last few years. Chinese companies now look to buy domestic wind turbines which cost then a fraction of what Suzlon offers. Since Europe is the hub of cutting-edge wind energy technology, the move to invest in a manufacturing hub in UK seems to be a wise move. The company would have access to the latest testing facilities and expertise in Europe. Wind tunnel testing of wind turbine blades is a crucial aspect in the wind turbine development. Suzlon has no wind tunnel testing facility of its own in India and rents such facilities from government institutions which are not readily available, leading to delays. Europe has several wind testing facilities which can come handy for research and development of new designs. The company would also look to grab a share in the rapidly-growing British wind energy market. Wind energy market grew by a whooping 31 percent as compared to 20 percent growth in the overall renewable energy sector. The British and Scottish governments have ambitious renewable energy targets and look to increase the wind energy’s share in their energy mix. The move to build a manufacturing facility in UK is another step in a series of strategic deals around the world. Such moves would help the company grab crucial shares in the new and developing markets and help it develop high quality products using better R & D facilities.

Source: environment.co.za

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