Mumbai: Suzlon Energy Ltd has announced an ambitious albeit capital light diversification plan that would see the manufacturer and developer of wind power plants diversify into becoming a one-stop provider of renewable energy services across wind, solar, and batteries.
The wind energy pioneer is now pitching itself as an end-to-end service provider right from the stage of identifying suitable land for renewable energy project to securing the land and permits, project construction, getting grid connectivity, and handling maintenance thereafter for the lifetime of the project. It also wants to get into battery pack assembly for battery energy storage systems (BESS).
However, the company will stop short of making solar panels, where it feels the market is too crowded. Neither will it manufacture the cells that go into battery packs for BESS.
Suzlon wants to build an orderbook of 15 gigawatts across wind, solar and BESS by 2031, compared to a wind-only orderbook of 5.9 gigawatts at present. It also wants to increase its annual project execution to 10 gigawatts by then, up from wind-exclusive 2.5 gigawatts presently. The company is also targeting 70 gigawatts of assets under its maintenance contract, up from around 18 gigawatts.
“I'll be your one stop answer for any of your renewable needs - wind, solar, storage, integration - everything I will deliver,” said Girish Tanti, the vice chairman of Suzlon Group.
The key aspect of the diversification plan will be the company’s renewable energy DevCo, or development company. It will identify suitable sites for wind project development, apply for connectivity permits there, and sell it as a ready-to-build site to customers, significantly cutting down the project development time, and thus costs.
The company wants to get 60% of its wind turbine sales through this division, according to Ajay Kapur, Suzlon Group’s newly-appointed chief executive officer.
“DevCo will be the magnet that will attract customers,” Kapur said. The former chief of Ambuja Cement will oversee the execution of the new businesses at Suzlon.
Suzlon has already identified sites sufficient to develop 25 gigawatts of wind energy, and many of these sites can also support solar plants, Tanti said. The company has allocated ₹500 crore to the DevCo which will be used to lock land and grid transmission connectivity.
Capital light expansion
Called Suzlon 2.0, this plan also includes resumption of export of wind turbines to Europe after nearly two decades, which the company announced in April. After Europe, the company also has its sights on markets like Australia, Middle East & North Africa, and South America. By 2031, the company wants to book 3 gigawatts of export orders.
Together, these are Suzlon’s biggest diversification bets in two decades following a long period of financial turnaround where it sold off several non-core businesses and exited non-core markets to tide over a debt crisis.
The company had made aggressive acquisitions around the mid 2000s to expand into newer markets as well as different parts of the wind turbine value chain like gearbox manufacturing. However, when wind energy fell out of favour in subsequent years, the company found it difficult to service its debt and was forced to sell its parts to keep its core. Over the subsequent years, the company maintained strict financial discipline to mend its books and was in the right position to leverage a global resurgence in interest in wind energy.
As it looks to diversify again, Suzlon wants to be judicious with how it deploys capital. None of the new businesses that it plans to expand into will require significant capital investment in building new factories. Neither is the company looking for big acquisitions. Rather, it is building on its years of expertise in setting up wind projects to diversify into an end-to-end service provider.
Suzlon is scouting for partners who will supply solar panels for its projects. The company is considering investing about ₹200 crore in a battery pack assembly plant, however, in this space too, it is looking for partners, Tanti said. The modest investments required for the new plan will be met from internal accruals, he said.
“We’ve chosen to play on our strengths,” Tanti said, adding that the company’s plans involve judicious capital deployment. “We believe with this model we really can deliver greater value to our stakeholders.”
The expansion plan comes at a time when India’s power demand is expected to grow by a third between 2025 and 2030 to 2,128 gigawatt-hours and installed renewable energy capacity doubling to 400 gigawatts, as per government estimates. Wind energy capacity in the country is expected to double to 100 gigawatt over this period.
