Inox Wind director: Chinese turbine giants 'come and go' in India and western players are done

INOXGFL Group has its roots in a newsprint trading business founded by Jain’s grandfather a century ago and has since expanded into areas as diverse as cinemas and chemicals, with wind a more recent addition. Jain is executive director of the group, chaired by his father Vivek.

With hindsight, the painful transition to competitive tendering and then the pandemic has arguably worked in favour of Inox. With so many other players in the market “eliminated” Jain said “effectively you are down to two or three players – the last man standing.”

Now Inox Wind is debt-free and profitable and has, he said, begun “ramping up manufacturing” and getting the supply chain “back in place,” he said. Because when the sector shuts down for years “it's not that you press a button and in one quarter it gets fixed.”

“It's taken us 12 months to fix all of that. And as we kept walking the talk, investors kept backing us,” he said.

Jain predicts the company will continue to see “massive growth” in the next year. “We’ve just built the airport, now the flights need to take off.”

‘We’re as cheap as the Chinese’

One of the key stories of the Indian wind sector in recent years has been the stratospheric rise of Envision.

The Chinese turbine-making giant has seen sales increase exponentially over the last few years. Consultancy MEC+ estimated in May that its 7.4GW order book represented over 40% of those placed in India.

Jain casts doubt over the accuracy of some reported order books – non-specifically criticising some “paper framework agreements” as “utter rubbish" – but conceded that Envision came and “took a chunk of the market when both Inox and Suzlon were struggling and getting their act together”.

Now, however, Inox and Suzlon are “back in shape” and he claims that, whatever the MEC+ figures might say, most orders are going to the Indian duo.

That’s because for “A-grade quality” turbines there is “no difference” in cost between Envision and Indian OEMs, he said. “If you are going to supply poor quality then, honestly, I'm not competing in that market with you.”

Shipping a turbine blade from China to India costs more than making it, he said, while towers have to be made locally because of anti-dumping duties, and OEMs are required to assemble nacelles in India.

This reality is perhaps reflected by the fact Envision has in recent years opened nacelle and blade factories in India and has used local suppliers for tower components.

A foreign OEM has to be “more competitive” if they are going to try and sell a turbine of the same quality as domestic players, argued Jain, otherwise why would a buyer not choose a local seller?

“A lot of the Chinese OEMs come, go, come, go,” he said.

“When you buy a turbine again, someone needs stability for 20 years, because who's going to be around for spare parts, servicing, etcetera? It's not just buying a mobile phone and then changing it every two years.”

“To that extent, I think we bring a lot more credibility capability, which is very important for many of the large conglomerates who are investing in renewable energy,” he said.

Jain claimed that those with Chinese, Hong Kong-based and foreign money may use Chinese turbines but “they don’t care or they are flipping assets.”

But he claimed that long-term asset owners and conglomerates in India “don’t touch the Chinese.”

Western OEMs have ‘absurd’ costs and are on the way out

The rise of Envision in India and the revival of Inox and Suzlon have coincided with the fall of once-dominant Western suppliers in the country.

But the most recent MEC+ numbers put Siemens Gamesa, now mulling a sale of its Indian operations, on a paltry 3.5%.

GE and Vestas each had an 11% share in 2019 but have seen their respective shares drop to 5% and 1.1%.

Unless Western OEMs “change themselves drastically,” Jain claimed they simply cannot compete with Indian and Chinese suppliers in India.

“Their costs are absurd. They don't provide turnkey services.”

During the era of feed-in tariffs where there were “very high returns” developers had more money to spend on turbines, he said.

But in the “cost-sensitive reverse auction market” that is no longer the case. Now, Inox Wind is he claimed “way too competitive” for Western competitors.

‘Booming’ onshore market cools desire for move offshore

After years of false starts, the Indian government has in the last year finally fired the starting gun on developing its offshore wind sector, with 7.2GW of capacity flagged for auctions.

“It’s a great forward-looking move,” said Jain, but for “next decade and many years thereafter” he said onshore will dominate because offshore wind will be more than twice as expensive.

“Yes, we are a rapidly progressing country,” he said. “But we are a poor country. And your cost of energy is very important.”

Regardless, Jain said that India still has “massive onshore potential”. The country is only halfway towards its 100GW target for wind power by 2030, “so look at the massive scale-up required,” he added.

There will be a few gigawatts of offshore wind capacity that arrive in the next five years or so, said Jain, but he would “rather wait” before getting involved.

“It's too far away. The [onshore] market is booming. There is a shortage. We are ramping up. So I'm completely focused on onshore.”