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Wind-Power Playing Leap-Frog in the Developing World

From The New York Times (28/09, "The Ascent of Wind Power" by Keith Bradsher) we learn of some amazing progress in harnessing wind-power on strictly economic grounds – quite apart from its environmental virtues.

"Khori, India – Dilip Pantosh Patil uses an ox-drawn wooden plow to till the same land as his father, grandfather and great-grandfather. But now he has as new neighbour, a shiny white turbine taller than a 20-story building. Generating electricity at the edge of his bean field.

"Wind power may still have an image as something of a plaything of environmentalists more concerned with clean energy than saving money. But it is quickly emerging as a serious alternative not just in affluent areas of the world but in fast-growing countries like India and China that are avidly seeking new energy sources. And leading the charge here in west-central India is an unlikely champion, Suzlon Energy, a homegrown company.

"Suzlon already dominates the Indian market and is now expanding rapidly abroad, having erected factories in locations as far away as Pipestone, Minn., and Tianjin, China. Four-fifths of the orders in Suzlon’s packed book now come from outside India.

"Its success suggests a way of serving expanding energy needs without relying quite so much on coal, the fastest growth fossil fuel but also the most polluting.

"Suzlon in many ways is an outgrowth of India’s dysfunctional power-distribution system. Electricity boards owned by state governments charge industrial users more than twice as much for each kilowatt-hour as customers pay in the US – and they still suffer blackouts almost every day, especially in northern India. Subject to political pressures, the boards are often slow to collect payments from residential consumers and well-connected businesses, especially before elections. As a result they often lack the money to invest in new equipment.

"With natural gas prices climbing as well, wind turbines have become attractive to Indian business. The Essar Group of Mumbai, a big industrial conglomerate active in shipping, steel and construction, is now working on plans for a wind farm near Chennai, formerly Madras, after concluding that regulatory changes have made it financially attractive.

"The mechanisms didn’t use to be there; now they are. The electricity boards know how to cost it, they know how to pay for it.

"‘Roughly 70% of the demand for wind turbines in India comes from industrial users seeking alternatives to relying on the grid,’ said Tulsi R. Tanti, Suzlon’s managing director. The rest of the purchases are made by a small group of wealthy families for whom tax breaks for wind turbines are attractive. Wind turbines will remain competitive as long as the price of crude oil remains above $40 a barrel. With oil below that, wind energy may require subsidies, or possibly carbon-based taxes on oil and other fossil fuels."

Cultural vs. Environmental Shock

"To minimize land costs the wind farms are typically in rural areas, chosen for the strength of the wind there as well as for low land prices. But that can mean cultural shock.

"In this remote, hilly and tribal area 200 miles northeast of Mumbai, oxen remain at the center of farm life, and motorized vehicles are uncommon. More than 300 giant wind turbines with 110-foot blades snatch electricity from the air. But it has also struggled with the sporadic lawlessness that bedevils India.

"The copper or aluminum fetches as little as $1 from black-market scrap dealers. But each repair costs thousands of dollars in a country desperately short of electricity and technicians.

"Despite such problems, Suzlon has expanded rapidly as global demand for wind energy has taken off. Its sales and earnings tripled in the quarter ended June 30, from the equivalent of $41.6 million on sales of $203.4 million. The demand has particularly accelerated in India, where installations rose nearly 48% last year, and in China, where it rose 65%, from a lower base. Wind farms are starting do dot the coastline of east-central China, and the southern tip of India as well as scattered mesas and hills across central India and even Inner Mongolia.

"Still China accounted for 79% of coal consumption last year and India used 7% more, according to statistics from BP. China’s target calls for expanding wind power almost as much as nuclear energy over the next 15 years. International experts are more skeptical that wind will displace coal to a considerable extent, saying that the sheer scale of energy demands suggests that coal burning will expand even faster than that of wind mills. Suzlon still sees plenty of opportunity in China and has decided to build some of its latest designs in China for the market there, despite the risk of having them copied by Chinese manufacturers.

"Chinese manufacturers already have the edge of price over imported equipment, according to Meiya Power of Hong Kong, which operates power plants across China and Asia. Mr. Tanti says rapid innovation and design changes would allow Suzlon to stay ahead of copycats. It would take about two to three years for rivals to clone Suzlon turbines because they use unique and proprietary parts. Suzlon has just completed a turbine blade factory in Minnesota, where it supplies turbines for a wind farm operated by the Edison Mission Group and Deere and Company. To reach the Suzlon wind farm here, the huge rotors travel by night on special trucks for the 300-mile ride from northwestern India on a succession of paved and dirt roads.

"Squatter huts have had to be removed along the way to allow the long trucks to turn. The truck crews also carry wooden poles to prop up electricity wires across the road to pass underneath."

-- from Economic Reform, December 2006

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