Government's Push for Local Wind Turbine Manufacturing Boosts Domestic Stocks

Following the Ministry of New and Renewable Energy's (MNRE) proposal for local manufacture of major wind turbine components, sources in Moneycontrol have reported that shares of Suzlon Energy and Inox Wind, prominent Indian wind turbine manufacturers, were surging on Monday. This move encourages domestic manufacturing and reduces dependency on other countries for imports.

Market Response

Suzlon Energy share prices surged by almost 5% to touch an intraday high of ₹57.65 on the NSE, while Inox Wind's shot up nearly 6% in the early hours of trading. According to analysts, this surge in share prices could be attributed to the draft notification, which has the potential to enhance the competitiveness of domestic manufacturers while reducing the market share of foreign players.

Details of the Proposal

The draft notification from the Ministry of New and Renewable Energy (MNRE), released on April 17, requires foreign wind turbine manufacturers to manufacture critical parts, blades, towers, gearboxes, and generators in India. The draft notification also says that data centers and wind turbine operations-related servers must be set up in India, with all operational data stored and maintained in India. 

In addition, foreign companies will have to set up research and development (R&D) centers in India within six months of the notification being issued. This move aims to keep operational control of wind turbines within Indian territory, ensuring data security and self-reliance in technology.

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Impact on Foreign Manufacturers

The new policy creates difficulties for foreign wind turbine manufacturers such as the Chinese firms Envision Energy and Sany Group and global players like Vestas, GE Vernova, Senvion, and Siemens Gamesa. If they want to sell their turbines in India, they will have to manufacture them here, which will probably increase their operational costs and impact their market strategies.

NITI Aayog's Recommendations

Additionally, policy think tank NITI Aayog has recommended that a wind power generation asset be classified as critical energy infrastructure. NITI Aayog suggests modifying current guidelines to require at least 60% local content by value for important components such as nacelles, blades, towers, hubs, and controllers. This has been proposed to strengthen domestic manufacturing capabilities and address cybersecurity concerns regarding foreign hardware and software.

Industry Outlook

India's ambitious target to reach 100 GW of wind energy by 2030 offers multiple avenues for domestic manufacturers to explore. According to Morgan Stanley's projections, this would result in Suzlon's order book increasing to as high as 32 GW and propelling its market share from the current 31% toward 35-40% by FY27.

Recently, Suzlon received a new project order from Sunsure Energy to supply 48 S120 2.1 MW wind turbine generators. These turbines will be installed in Jath, Maharashtra, as part of the new project. The company has claimed that it has installed a total of 50 GW in wind energy. Hence, it is the greatest player in the Indian market.

Conclusion

Making local manufacturing of wind turbine components mandatory is MNRE's proposal, which marks another leap forward in enhancing India's renewable energy scenario. The policy seeks to strengthen energy security, guarantee technology innovation, and promote domestic production while aiming to lessen dependence on imports. Stakeholders will watch closely how this policy develops and its impact on the wind landscape as it undergoes further reviews and possible implementations.