With India emerging as a big market not only for conventional but renewable power, too, global energy major Siemens plans to make the country a major hub for its ‘green energy’ business. It has tied up with the Adani group for a foray into solar power, besides firming plans to put up a wind energy turbine plant in Baroda, targeted at other emerging markets.
Siemens Ltd, the flagship listed company of Siemens AG in India, plans to invest €70 million (Rs 430 crore) in the first phase for the Baroda project, to set up a 250 Mw manufacturing capacity. The Indian facility will act as a hub for energy-efficient automation and building solutions, a major business for Siemens, also Europe’s largest engineering company.
It is in the process of acquiring land for the unit, which will sell medium to low-end wind turbines globally, mainly to emerging markets like India. The plant is expected to take off by 2012. “We will ramp up the capacity in the second phase to about 500 Mw, depending on the demand in emerging markets,” Siemens Ltd’s managing director, Armin Bruck, told Business Standard.
India’s wind energy market is dominated by Pune-based Suzlon Energy, which controls 45 per cent of the market, followed by Enercon of Germany with 20 per cent market share and Vestas of Denmark with 12 per cent. Siemens, which has been present in wind energy since 1980 and has about 8,000 turbines installed in different parts of the world, mainly in Europe and the US, had missed this boat in India.
With an installed capacity of 11,807 Mw as on March 31, India is the fifth-largest wind power generator in the world, but the capacity addition in the sector is expected to get slower. Any new company will also need to focus on the export market. In contrast, solar power is expected to be the next big thing in the domestic renewable energy sector, with the government aiming to preside over an addition of 20,000 Mw capacity by 2022.
For the $5-billion Adani group, which has business interests in diverse fields such as energy, trading, ports, infrastructure and logistics, a tie-up with Siemens can help in accessing latest technology in the solar energy sector. The Adanis plan to set up a 100 Mw solar power plant at Surendranagar in Gujarat, through its subsidiary company, Adani Renewable Energy.
Its flagship power company, Adani Power, has operational capacities of close to 1,000 Mw and is developing coal-based projects of about 16,000 Mw. “We have signed a memorandum of understanding with the Adani group for solar power and is working out possible areas of cooperation in future,” said Bruck.
He said it was too early to reveal investment plans and other aspects of the collaboration. Products and solutions for solar thermal power plants are parts of Siemens’ environmental portfolio. In 2008-09, revenue from this portfolio totalled about €23 billion, making Siemens the world’s largest supplier of eco-friendly technologies. It supplies 70 per cent of a solar power plant, including turnkey solutions for large-scale photo voltaic units and tailor-made products for concentrating solar power (CSP) plants, including solar fields, power blocks, and critical solar power plant components. Siemens’ global energy sector has some 85,000 employees worldwide and in 2008-09, had generated external revenue of €25.4 billion and profit of €3.3 billion.
Siemens will invest more than Rs 1,600 crore in India over the next three years and a major part of this will be invested to set footprints in the renewable energy market and to expand presence in value priced products, Peter Loescher, president and CEO of Siemens AG had said in February.
Bruck said Siemens would not follow the strategy of developing wind energy farms in India by acquiring land and attracting investors for investment, a strategy adopted by its competitors here. “Land is a sensitive issue in India and we will come up with a suitable alternate model of business in India,” he said.