In Conversation With MR. RAMESH KYMAL, Managing Director, GAMESA Wind Turbines (Pvt.) Ltd.

 

By 2013 we want to achieve an annual installed capacity of 800 MW (in India) and contribute to 20 per cent of Gamesa’s global turnover”

 

Mr. Ramesh Kymal is the Chairman & Managing Director of Gamesa Wind Turbines (Pvt.) Ltd., a wholly owned subsidiary of the €2.7 billion Gamesa Group, Spain. Under the leadership of Mr. Ramesh Kymal, Gamesa has already captured a substantial share of India’s booming wind energy market in just over two years.

Gamesa is a leading supplier of wind power technology in the world and its core business comprises development, manufacturing, sales and servicing of wind power systems.
The company has an installed wind power capacity of 23,000 MW in 30 countries and 15,000 MW under maintenance. With 31 production facilities in Europe, the US, China, India and Brazil, the company is focusing on expanding its market share in target countries through its array of services and products. In 2010, Gamesa's consolidated revenues amounted to more than €2,764 million where iInternational markets accounted for almost 93 per cent of the sales.

 

Gamesa is currently developing two offshore turbines, the G11X-5.0 MW and the G14X, with unit capacity of 7 MW, based on the proven and validated technologies used in its G10X-4.5 MW machine. The prototype of the G11X-5.0 MW system will undergo testing in the last quarter of 2012, with a pre-series set to land on the market in 2013. With these turbines, the company hopes to venture and finally capture a major share of the developing global offshore market as well.

 

 

 

IWC: Gamesa is over two years old in India. How has the experience been so far for the company?

 

Mr. Kymal: The last 20 months has been a very interesting phase for Gamesa India as in this short span we have managed to capture 10 per cent of the annual installations and are in line to be amongst the top 3 suppliers in 2011. We have had a very dedicated team that has helped in achieving this feat. The introduction of the class III G58-850 kW turbine was also a key decision which has helped us gain foothold in the Indian market.


IWC: How many turbine models has the company introduced in the Indian market so far and what does it have in store for the future?

 

Mr. Kymal: At present, the G58 – 850 kW model has proven to be extremely successful in the Indian market. It’s designed to make the best use of the potential available in low wind sites generally prevalent across India. We also have the AE59 – 800 kW model, which has been installed in Sri Lanka.

 

We have recently installed a prototype of the G97-2 MW turbine and will soon be launching the turbine commercially.


IWC: The Company set up a manufacturing facility in Chennai in 2010. Will the turbines manufactured in the facility be used only for the domestic market or does the company plan to export to other countries as well? If so, then which countries are you hoping to target for export of turbines out of India?

 

Mr. Kymal: The turbines manufactured are primarily for installation across India, but we would be meeting the requirements of the South Asian market also. We have already exported our turbines to Sri Lanka and are currently the market leader there.


IWC: What are the company’s short-term and long-term strategies for India? Do you plan to use the country as a base for developing business activity in the neighboring countries?

 

Mr. Kymal: By 2013 we want to achieve an annual installed capacity of 800 MW and contribute to 20 per cent of Gamesa’s global turnover. We have made an investment plan of €100 million to develop projects in States like Andhra Pradesh, Karnataka, Maharashtra, Madhya Pradesh and Rajasthan, and at the same time continue our dominance in Tamil Nadu. We also are coming with up with new blade and tower manufacturing factories in Gujarat. In order to achieve our goals we would need to improve our manpower also and are planning to grow to 1,000 personnel by the end of the year and 1,300 by 2012.

IWC:
Does part of the long-term strategy include setting up more manufacturing facilities in India? If so, what kind of an investment could we be looking at?

 

Mr. Kymal: Currently we have the G5x turbine manufacturing facility in Red Hills, Tamil Nadu, and are constructing a new nacelle facility in Chengelpettu, Tamil Nadu, for the G9x-2 MW turbine. In Baroda, we have a blade facility under construction and have partnered with a Spanish company for manufacturing tower units. A total of €60 million has been invested for expanding our manufacturing facilities across India.

IWC: How many projects do you have in the pipeline as of today? Which States are the projects mostly based?

 

Mr. Kymal: Tamil Nadu continues to be the largest market but we are witnessing a lot of interest in States like Maharashtra, Gujarat, Andhra Pradesh and Rajasthan. We hope to expand rapidly across these States in 2012 and are looking at a target capacity of 500-600 MW.

IWC: The concept of repowering projects is still new and the potential of such projects has so far remained untapped in the country. Do you think if Gamesa undertook such projects as part of its strategy, it would be able to grab a major share of this market?

 

Mr. Kymal: We are looking at a total capacity of 1,000 MW available for repowering. We have already executed a couple of repowering projects in Tamil Nadu. We have completed two projects with an aggregate capacity of 12 MW and there are few in the pipeline.

Although challenging, we have managed to garner some good experience. Gamesa’s focus is more on bringing down the total cost of energy and repowering allows us to drastically improve the utilisation of good wind resource available in these sites.
 

IWC: What are your views on the Ministry of New & Renewable Energy’s decision to do away with minimum Wind Power Density (WPD)?
Since most good wind speed sites in the country have already undergone extensive development, therefore untapped locations have become quite sought after by all big players. However, the low to medium wind sites have yet to attract appropriate investment. How does Gamesa plan to tap into that segment of the market?

Mr. Kymal: This is a welcome decision as modern technology is geared to exploit such low wind sites. It will help reduce the cost of land as more area will be available for development and this may also accelerate growth.

The G58 – 850 kW model, which we have already introduced in the Indian market, is ideally suited for such low to medium regimes.

 

IWC: Recently there was news that Gamesa is open to investing in equity of its potential customers as part of a strategy to help its expansion plans. Could you please elaborate on this?

Mr. Kymal:
Gamesa firmly believes in the long term potential of the Indian wind market, which is driven by the thirst for energy. When the sector is undergoing a tough time due to the global crisis and with some new revenue models that are emerging, Gamesa believes we would be an ideal partner to aspiring IPPs that are investing in the wind sector. We are already in discussion with a couple of IPPs for similar minority stakes.

IWC: One of the biggest hurdles for the Indian wind energy sector is the lack of enough trained professionals. Will the company be looking at launching its own training programmes for local recruits without any experience or knowledge of the sector to absorb them as part of a long term strategy for the sub-continent?

Mr. Kymal: We already have our own training programmes for technicians. However, with the growth in the industry there is indeed a shortage of quality manpower. The industry has been working with various government agencies to improve the quality and quantity of manpower entering the wind sector and we will continue to support going forward.

IWC: India is one of the fastest growing wind markets in the world. According to a recent UNEP report, India was among the top countries in the world that attracted renewable energy investments. How do you foresee the financial market of the country in the coming years? Will India be able to gain ground and improve its ranking or fall back? Also, who do you think would be contributing more, domestic financial institutions or international organisations?

Mr. Kymal: Unlike the west, India has a fairly strong financial sector. The key challenge is the cost of debt. For the first time in 2 years India’s industrial output shrunk this October. This is primarily due to high cost of borrowing and fewer export options. It is becoming extremely challenging to secure financing for projects since the debt servicing capability reduces with higher interest. Besides this, the return expectation of investors is also increasing, which puts a negative pressure on the profitability of supplier.

Overall, the fundamentals and the long term prospects are strong. Both domestic and foreign funds will flow into the sector since only a hand full of markets such as Brazil and China along with India remain attractive.

IWC: What are your views on the Renewable Energy Certificate (REC) mechanism, Generation-based Incentive (GBI) and Accelerated Depreciation introduced by CERC? How do you foresee these contributing towards the growth of the wind sector of the country?

Mr. Kymal: REC mechanism-It was created to indirectly promote inter-State transaction of renewable energy. Enforcement of RPOs will be key to the success of the REC mechanism. It would be beneficial to ease the moratorium that has been imposed on existing projects. Also, in order to address the banker’s concern on revenue certainty, bilateral trade should be permitted within the floor and forbearance price.

 

GBI-This should not only be extended, but there should also be an increase in the incentives offered. The ceiling on incentives based on the megawatt has to be done away with as the prime objective is to promote efficiency. This way more efficient turbines will get more incentive.

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AD-This has been the prime driver of the industry thus far. Though this may not directly promote efficiency as GBI, time is not ripe to discontinue AD as yet. Considering the dismal registration of projects under GBI and the nascent REC market, AD should be continued to sustain the growth momentum. The scheme should be phased off gradually as the new policy schemes begin to drive the industry.


IWC:
What are your views on the 12 Plan? Do you have any recommendations for the Government?

   

Mr. Kymal: The following are some of the recommendations that we would like to be implemented:

> Postpone the power forecasting for wind power until a robust forecasting methodology is finalised;

> Continue with the preferential tariff scheme as the industry has not matured yet or ready for the competitive bidding regime;

> Simplify allotment of government and forest land for wind projects. Also, device a policy on land allotment with an expiry clause to avoid cornering of land by few developers;

> Mandate adequate and internationally recognised certification requirements (IEC, GL etc.) before doing away with the Revised List of Models and Manufacturers (RLMM) scheme;

> Government should encourage Repowering/Inter-cropping concept in a big way by offering incentives / sops like revising the PPA with the new tariff etc.;

> The RPO for renewable energy to be fixed for each State and should be uniform, wherein a minimum quantity and period should be fixed and some stringent penalty should be there for non compliance.



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