Overlooking a busy Indian highway, on the outskirts of Chennai, stands a solitary turbine, blades spinning in the wind.
For its owners RRB Energy, the unit has, over the years, generated good returns – serving as both billboard and power supply for the work going on far below.
However, while the turbine may be operating in isolation on site, it’s an entirely different story when you take a look at the wider Indian wind energy picture.
At current best estimates, the Asian powerhouse has in excess of 13,000MW of wind power in operation, with a multitude of different turbines located in all corners of the country.
And for the likes of RRB Energy – a wind turbine manufacturer established way back in 1987 - this growing appetite for domestic wind energy helps paint a very rosy picture.
The V27 225 kWh turbine based at RRB Energy's Chennai factory
Naturally the business is quick to dismiss the domestic challenges of grid connection complexities and the ability to lock down power purchase agreements (PPA’s) – both key areas that international market participants all too frequently cite. However, senior RRB executives admit that transportation and movement of the turbines within rural India is now starting to present an increasing headache – particularly as utilities and developers look to capitalise on bigger units, with bigger blades that offer far greater returns.
Evidently then, the switch within India away from 600 kWh, towards the far bigger 1.8MW units is still someway off, although it’s refreshing to see that the appetite is already there.
And that is of course the key.
The appetite for this clean energy technology really is already here. Each new installed unit is recognised not just as a cash generator for the developer but also as an important contributor into the future of the Indian electricity grid.
Naturally, it’s a future that RRB Energy is all too keen to play its part in. And, given its heritage and track record to date, it’s easy to see why.
For RRB Energy isn’t producing any old wind power units. There’s simply no need to do so if you hold the exclusive international rights to manufacture and distribute the V27 and the V47 Vestas turbines.
A curious situation? Yes - and almost certainly unique.
It’s one that came about back in 2006, following the end of a longstanding partnership with Vestas that initially enabled the Danish firm to establish a foothold in the Indian market, before deciding to cash in its chips and move on.
For Vestas, the net result was what has only ever been described as a, “…substantial cash injection…” onto the company balance sheet and the termination of an international partnership that it was either no longer willing or able to continue to participate in.
For RRB Energy of course, the subsequent benefits have been sufficient for it to continually invest in and build out its domestic business – as the construction of its new blade manufacturing facilities in Chennai today, clearly demonstrate.
Construction continues on the new RRB Energy blade factory, due to be completed later in 2012
However, in the longer term, it appears that the international benefits for the business and its impact on the likes of Free Breeze – its ambitious and fast growing international partner – may well be greater still.
For when Vestas sold the technology rights to India, nobody – least of all Vestas – foresaw that the future growth within this critical area of the market.
Yes, these early units sit below the limits used by today’s Western utility giants and yes the technology itself has now been substantially enhanced and improved, both in terms of efficiency, operations and maintenance. But to judge its future success on the mechanics alone is to miss the point.
Rather, the ongoing sales success of this technology is precisely because of its relative simplicity and the ease with which the units can be manufactured and assembled, transported, serviced and repaired.
In the world of turbine technology, it’s clear and uncomplicated engineering and for European landowners and the wider agricultural community - where there are already signs of future growth – that really matters.
And that of course, is where the likes of Free Breeze fit in. Established twelve years ago and headquartered in Canada, the business has already made a name for itself within the North American wind and solar communities.
And as the momentum builds, it’s only natural for the business to look towards new markets overseas.
For James Pearce, Business Development Manager, Free Breeze, that means a fresh focus on introducing the Indian manufactured units into the UK.
James need not worry. For initial interest in the units has been strong, with the first deposit received in the final few days of 2011.
"It was 24th December when the order for two V27 turbines landed," said James.
"Both turbines, due to be shipped and erected on the Isle of Luing later this year have been sold to a private developer and mark an important milestone for the business and the UK agricultural and investor community."
And he's right. Since provided UK planning consent can be adequately addressed, the proposition has the potential to become an attractive, cost effective alternative to what’s already on offer to the UK onshore market.
Recently finished blades, stored and ready to ship at the Chennai factory
EU imports
It’s this promising future, combined with some attractive long term financial returns, that has already sparked the interest of White Rock Wind Energy, a medium scale UK and Ireland based developer with a €100m war chest to invest.
Perhaps it’s unsurprising then that Richard Blackburn, Chief Operating Officer, White Rock Wind Energy, already recognises the potential that an Indian manufacturer like RRB Energy presents.
“It’s certainly a market that offers us a great deal of scope,” said Richard. “The challenge of course will be not be in placing the orders and getting the units shipped, but rather, in ensuring that all the necessary paperwork, certification and due diligence is in place.”
For the Indian domestic market, this may be less of a concern but as soon as European developers import goods from outside the EU, then it’s time to take note.
As Richard highlights, everything that is imported into the EU must confirm to EU health and safety standards and the very latest legislation. And it’s the developer’s responsibility to ensure that these strict guidelines are met.
“There’s an element of self regulation involved,” says Richard. “The challenge of course comes when developers look to benefit from the preferential rates associated with Indian manufacturing, import the turbines into the EU and remain unaware of their future obligations.” That, he says, is where it can all go wrong.
The future
Evidently then, for manufacturers, distributors and developers alike, change is already afoot. And what this means for the future of the UK and European market is still far from certain.
However, with the team on the Chennai factory floor quick to emphasise an increasing focus on quality, innovation and the need to secure (and maintain) international approval and certification, the opportunity remains.
To what degree that opportunity is realised of course, it to a greater or lesser extent dependent on the distributor, who increasingly serve as a linchpin between manufacturer and market.
“As a developer,” says Richard, “our ideal situation is for the manufacturer and distributor to be working in sync to provide us with all the necessary legislative and planning documents and requirements up front, in one go.”
And it makes sense. Since by adopting this approach developers maintain a focus on attracting finance, obtaining planning and consent and ensuring adequate compliance at a local, national and European level.
That spells good news for the developer, good news for the ambitious manufacturer and good news for the order books of Free Breeze.