Wind energy at its peak, with 8 more years of growth: Suzlon Group CEO

Chalasani speaks about the prospects of the Indian wind energy sector, opportunities in defence and railways, and Suzlon's strategies to maintain its leadership

After a financial turnaround and achieving a debt-free status, Suzlon Energy is focused on driving financial growth. J P CHALASANI, group chief executive officer of Suzlon, speaks with Jaden Mathew Paul about the prospects of the Indian wind energy sector, opportunities in defence and railways, and Suzlon’s strategies to maintain its leadership. Edited excerpts:

 

Suzlon holds market leadership in India. What strategies are in place to strengthen the company’s market position?

The commercial and industrial (C&I) segment is set to be a major growth area. According to an ICRA report, India will require about 78 gigawatt (Gw) of wind and solar energy by 2027, which represents huge potential. We are a preferred player in this space. Maintaining our lead over competitors will not be a challenge. This is why we have the highest-ever order book of 5.1 Gw, and we expect this to continue for at least the next few quarters. C&I accounts for 54 per cent of our order book.

 

What is your view on the increasing competition in the sector? Do conglomerates like Adani plan to enter similar markets?

Competition is inevitable, whether it’s domestic or from Chinese players. It will continue to grow. Therefore, we need to keep strengthening our product and service offerings. Every company has its own niche. Challenges will always arise when entering a business, but it’s important to have faith in your product and customer segmentation.

 

You spoke about cycles in the wind energy space. Where are we now?

We are at the peak of the cycle. Personally, I believe this phase will last for at least eight to 10 years. The targets set are becoming increasingly serious, such as net neutrality by 2070 and achieving carbon neutrality, along with various other climate goals. The demand for wind energy will continue, and there’s clear visibility for the next eight years. Beyond that, we don’t need to look too far ahead.

 

India is considering offshore wind energy. What is your opinion on this?

India is very sensitive to tariffs. Offshore wind energy in Europe has grown for two key reasons: first, they have limited onshore space and must move to the sea; second, the incremental generation from onshore to offshore is higher. As a result, even with rising costs, the economics are viable. In India, however, we have vast onshore potential. Plus, offshore costs are high, with the current expectation being Rs 7 to Rs 8 per kilowatt, which could deter buyers. Offshore wind energy might be valuable in the long term. But will it move the needle significantly in the next five to six years? I don’t know.

 

You are now a debt-free company. Do you plan to maintain this status, and do you have plans for the cash on your balance sheet?

We currently have Rs 1,200 crore sitting on our balance sheet. We are focusing on capacity expansion and do not need to borrow any more money. Our service business generates Rs 750 crore in earnings before interest, taxes, depreciation, and amortisation every year. Therefore, there is enough cash flow, and we have no plans to borrow at this stage.

 

The group plans to enter non-wind segments. Could you elaborate?

The non-wind segment primarily involves manufacturing castings and forgings for sectors like railways, defence, and oil and gas. Qualifying for these sectors takes time, especially in defence and railways. The qualification process is lengthy, but we are in the process of meeting these requirements. We expect to start receiving orders by the end of next year.