Financial Year 2016-17 (FY17) was a historic year for Suzlon.
Passion perseverance and commitment characterised our performance; the resultsreflected our sustainable and profitable turnaround. 1779 MW installations in FY17 is ourhighest-ever commissioning in India in a single fiscal year. The Company's stellarperformance across all parameters-financial operations sales project management andservices demonstrates that Suzlon is back on the growth path with renewed vigour. It isalso reflected in our improved credit rating both at the group level and in our servicessubsidiary.
This achievement re-endorses our leadership position with over 11000 MW of cumulativeinstallations in India and over 17000 MW globally.
Suzlon outlook-Stronger smarter and sustainable
In the past two years Suzlon has registered a growth rate of over 100% Y-o-Y which istwice the growth rate of the market during the same period. While we are market leaderswith ~35% share in India's cumulative wind installations we are also headed towardsachieving leadership position in annual wind installations. Our annual market share inIndia has grown from 19% in FY15 to 33% in FY17.
Suzlon has further strengthened its manufacturing capabilities and presence across allnine wind resource-rich states in India by establishing three new rotor blade factoriesin Madhya Pradesh Andhra Pradesh and Rajasthan. Our future-ready technology extensiveservice and manufacturing capabilities and presence in 18 diversified geographies servedby over 8600 strong global workforce will power our robust resurgence as a globalrenewable energy player.
R&D-Our cornerstone of success
At Suzlon harnessing futuristic technologies and thus staying ahead of the technologycurve has been the cornerstone of our success. We continue to invest in R&D incubateinnovation and implement the outcomes in our product development processes operationsand maintenance services. The net result has been a significant reduction in levelisedcost of energy (LCoE) in the last five years and we have been able to bring down the costof energy by almost 25%. Continuing this legacy we introduced the S111-120m wind turbinegenerator (WTG). The first commissioned turbine of S111-120m delivered a 42% Plant LoadFactor (PLF) over its first 12 months of operation-this is the highest PLF in the Indianwind industry. The S111-120m will prove to be a game changer in the Indian renewablemarket.
Our wind-solar hybrid technology has gathered momentum. While we await the wind-solarhybrid policy to further mature we have commenced technical studies in Rajasthan AndhraPradesh and Gujarat. Our development pipeline infrastructure nation-wide operations andstrong maintenance capabilities shall reinforce our leadership position in this area. Welook forward to harnessing these emerging opportunities.
Our Blade Science Centre at Vejle Denmark was established last year. It has enhancedour technological competence by aiding in the development of better airfoils end-to-endblade solutions to make more efficient turbines and lowering the LCoE. We are pushing theaerodynamic limits with each new turbine model. We are also introducing advanced materialssuch as carbon fibre in our next-generation turbines which will make our blades strongerand lighter.
Digital and technological transformation
We have embraced digital transformation by investing in relevant technologies forimproving our operations maintenance services scheduling and forecasting and real-timemonitoring of our machines. This digitisation has increased the efficiency of ourturbines. Today with over 10000 wind turbines in operation across 18 geographies wehave harnessed the competitive advantage of big data and sophisticated data analytics.This has strengthened our preventive maintenance algorithms and ensured fewer break-downs.
Renewables-A transition from alternative to mainstream
FY17 was a significant year for the renewable energy sector globally as well as inIndia. Internationally more renewable power capacity was added as compared to (net)capacity addition from all fossil fuels combined*. This is a clear indication thatrenewables has achieved mainstream and base-load status.
Rapidly evolving technology declining production cost conducive policy reforms andgrowing consciousness to mitigate climate change risks has ushered in momentum in favourof renewable energy across the world. It is heralding a new wave of interest and positiveaction in the clean energy sector. India registered its highest-ever wind and solarcombined installations of ~14400 MW during the year. Its renewable energy capacityaddition in FY17 surpassed capacity addition of conventional fuel sources which stood at7700 MW capacity. Wind energy exceeded the government's target with installation of 5500MW. With such positive impetus the writing on the wall is clear-the future of energy iscertainly green!
Market outlook-Global and India
Renewable energy has entered an exciting new phase and its growth is unstoppable. Onceconsidered a niche industry dependent on government subsidies today it is driven largelyby economic realities improved reliability and cost competitiveness of proventechnology. According to Bloomberg New Energy Finance (BNEF) wind solar hydro and othersustainable sources are expected to account for half of our global energy mix by 2030.
Globally an estimated investment to the tune of USD 10 trillion is expected in theenergy sector between 2014 and 2035 of which renewables will attract USD 6 trillion**.
We are confident that the evolving technology and economic viability of battery forenergy storage will give further impetus to renewables.
In India investors are bullish and excited to be part of the renewable growth story.The declining wind and solar tariffs advent of competitive bidding in wind energy andpolicy reforms are steering new possibilities. This momentum will continue to gatherspeed. While FY18 will be a transitionary year FY19 onwards industry will deliver over6000 MW of new capacity. This will pave the way to unlock 300 GW wind energy potential inIndia delivering higher volumes and harnessing the latent potential of non-windy states.
In over 22 years of our experience the wind industry in India has witnessed severalpolicy changes uncertainties and business cycles. The industry has emerged strongerresilient and mature with renewed vigor. Suzlon has the inherent advantage of anearly-stage start-up which has today transformed into a position of pioneeringleadership. This makes a clear case of Suzlon being a preferred partner for globalcustomers.
With a view to improve productivity and strengthen to further efficiency the Companyhas initiated a Composite Scheme of Amalgamation and Arrangement (the "Scheme")involving merger of three wholly owned subsidiaries and demerger of tower division fromanother wholly owned subsidiary into the Company. In this regard the Honourable NationalCompany Law Tribunal ("NCLT") Ahmedabad Bench has approved the Scheme vide itsorder dated May 31 2017 the certified copy of which has since been filed with theRegistrar of Companies Gujarat. With that the Scheme has become effective on June 12017from the Appointed Date viz. January 1 2016 for the merger and April 1 2016 for thedemerger. The impact of the Scheme has been broadly covered in the Management Discussion& Analysis section of the Directors' Report.
Suzlon is committed to mitigate climate-change risks and herald the transition fromfossil-fuel-dominated energy architecture to that of clean energy. The Indian government'starget of 175 GW of renewables by 2022 including 60 GW wind appears to be an imminentreality propelled by technology and conducive policy environment. India has alreadycrossed ~32 GW wind installations and we believe that the industry will realize itstarget of 60 GW earlier than 2022.
Suzlon is well-equipped to capitalize on the inevitable growth of renewables both inthe domestic and international markets. Our growth strategy is based on strengthening ourleadership position in India and expanding our global footprint with focus on selectprofitable markets. In the US we are in a unique position of having created a 500 MWproject pipeline that qualifies for 100% Production Tax Credit (PTC) benefit. We expectthis 500 MW to be executed in the next two years.
Our key priorities are:
Leverage innovation and technology to bring down LCoE
Further strengthen our capital structure
Remain cost competitive to increase market share
Together we can
The light of the future casts the shadows of tomorrow. We will not rest on past laurelsand become complacent. We are agile and excited to seize any and every growth possibilityin the renewables market.
Sustainable affordable and reliable energy for all is no more a distant dream. It is areality and renewable energy has enabled it.
We are glad to partner with our stakeholders in the switch to renewable energyglobally. Together we can and we will empower the world with clean and sustainable energywhich is good for people and the planet.
I am thankful to my team whose relentless efforts have strengthened our brand's promiseof powering a greener tomorrow. I am grateful to all our stakeholders for maintainingtrust in us which has been our driving force towards creating greater value for theentire spectrum of stakeholders.