Until now, wind developers like Suzlon (NSE: SUZLON) and Vestas (CPH: VWS) had been providing wind farms to investors in India who were primarily looking for tax rebates instead of energy development.
But India ended those tax benefits back in March, shifting the entire business model. Now the market is looking toward major projects for the express purpose of developing wind energy, and this is where General Electric (NYSE: GE) stands to benefit.
“A major development for the better is the emergence” of the new developers, IDFC Director Nithin Kaimal told a conference in New Delhi last week. “There’s a greater emphasis now on the quality of the asset being developed. It’s healthier for the industry because it means much better economics.”
Suzlon used to have a 50 percent market share a few years back, but that dropped to 35 percent of the national wind market as of the last financial year.
Vestas, once the third-largest supplier, has stepped down to the fifth spot.
Indeed, Vestas CFO Dag Andresen stated that the company expects nearly $636 million in cash losses this year, and the company will be reducing the scope of its operations in India. Meanwhile, Suzlon faces a cash crunch and defaulted on $209 million in convertible bonds back in October.
Instead, major corporations like GE have made steady gains. GE will be supplying 450 MW in turbines over the next three years to Greenko Group Plc (LON: GKO), an Indian developer.
But all this also means China, with its accompanying cost advantages, can begin pushing its turbines into the Indian market, which—as the solar sector knows all too well—means crashing prices.
Last year, the number of turbine suppliers operating in India nearly doubled to 24 from two years prior, Businessweek reports. Today, India has the world’s third-largest wind market, trailing China and the U.S.