Climate change: Indian firms think
globally By Siddharth Srivastava
NEW DELHI - Climate-change efforts,
including alternative energy sources, have the
potential to be big business, and Indian companies
are cashing in.
Recently, India's Suzlon
Energy, the fifth-largest wind-energy firm in the
world (the biggest in India), clinched its single
biggest contract to supply wind-turbine capacity
to a US wind-power developer. Suzlon has signed a
contract for 400 megawatts of
wind-turbine capacity with
PPM Energy of Portland, Oregon.
Last week,
International Finance Corp (IFC), a private-sector
arm of the World Bank, forwarded a US$22.5 million
(Rs1 billion) loan to Moser Baer to promote solar
energy in India. IFC made the loan to Moser Baer
Photo Voltaic (MBPV), which is engaged in a $92
million expansion project near New Delhi to
produce electricity from sunlight.
MBPV
has announced that it will recruit more than 4,000
people over the next year and a half for its new
plant.
Like Suzlon in wind energy, Moser
Baer India is leading India's charge in the
solar-energy sector.
Recently, ITC's Sonar
Bangla became the first hotel in the world to
obtain Certified Emission Reductions (CERs) issued
under the aegis of the United Nations Framework on
Climate Change Convention (UNFCCC). These CERs,
also known as carbon credits, are issued under the
Clean Development Mechanism (CDM) of the Kyoto
Protocol.
Wind power The
Suzlon-PPM deal follows reports that the company
may be eyeing a stake in Enercon India, the
country's second-largest player, with an estimated
revenue of Rs15 billion. The purchase may cost as
much as Rs100 billion.
Suzlon has been
involved in a bidding war with French
nuclear-reactor maker Areva SA to acquire German
competitor REpower Systems AG. Recently, Suzlon
raised its offer for Repower to 150 euros per
share, which topped Areva's bid by 10 euros. This
saga will continue.
Indeed, Suzlon has had
its sights on the global wind-energy market for a
while now. The global supply of wind power could
double to 120,000MW from its current level of
60,000MW within just four years.
The
international market is expected to have an annual
turnover of more than $17 billion, with an
estimated 150,000 people employed.
Suzlon's revenues are mainly from sales to
Europe and the United States. The company has
orders of more than $2 billion.
The
"Global Wind Energy Outlook 2006" report said wind
power could supply 34% of the world's electricity
by 2050.
The competition is stiff. Suzlon
still trails global market leader Vestas Wind
Systems of Denmark, as well as General Electric,
Enercon of Germany and Gamesa Tecnoligica of
Spain.
Recently, Anil Ambani's Reliance
ADAG made a strategic entry into the wind-energy
business through Southern Wind Farms.
India and CDM Recently, Tony
Beck, coordinator of the Austral-Asia Emission
Trading Forum, told a Pacific Economic Cooperation
Council conference that India dominates the tally
of 226 CDM projects, followed by Brazil with 99,
Mexico with 78, and China with 71.
The
global carbon market last year tripled to $30
billion from $11 billion in 2005, the World Bank's
carbon-finance unit said.
New Delhi is
strongly promoting CDM. Recently, the Environment
and Forestry Ministry said Indian companies have
already earned almost $8 million via carbon-credit
trading.
The government estimates that
India's green initiatives could fetch a very
healthy $3.5 billion by 2012, with the total
number of projects under CDM with potential to
generate 355 million CERs at a minimal rate of $10
per CER.
Indian projects include a biomass
plant in Rajasthan and a wind-power plant in
Karnataka. The Industrial Development Bank of
India Ltd (IDBI) has entered a non-exclusive
memorandum of understanding with
Germany-headquartered KfW Bankengruppe jointly to
assist Indian companies undertaking CDM projects.
IDBI has also tied up with IFC to help
fund Indian companies to lower carbon emissions.
India's state-run oil explorer Oil and
Natural Gas Corp (ONGC) has registered its first
CDM project at the UNFCCC. This is one of the 13
projects ONGC has developed as potential CDM
projects in the first phase.
According to
estimates by RaboBank India Finance Ltd, the
carbon-credit market was $25 billion last year and
is growing at tremendous pace. There is a demand
to reduce 1 billion tonnes of carbon emissions in
the world, to reduce the threat of global warming.
If India meets one-fifth of this
requirement, it works out to a 200-million-tonne
carbon-emission reduction, which means that Indian
entities can earn more than $2.5 billion by the
year 2012.
Recently, chemicals and
technical textiles manufacturer SRF announced that
it has raised about Rs5 billion from the sale of
carbon credits so far this year.
Solar
energy Moser Baer's solar-energy efforts
were recently boosted when New Delhi finally
announced a semiconductor policy in February,
after a wait of more than two years.
The
company has announced that it will invest $250
million to expand its solar-cell-making capacity
to tap into the growing market for clean energy.
The investment should qualify for incentives under
the new semiconductor policy.
The global
photovoltaic market has seen high growth, and
sales are expected to grow more than six times
from the current $6 billion to $40 billion by
2010.
Last year, MBPV acquired a minority
stake in California-based photovoltaic firm Stion
Corp.
The company has acquired a 40%
equity stake in Slovenia-based Solarvalue
Proizvodnja from Germany-based Solarvalue AG for
an undisclosed amount, giving it an assured supply
of solar-grade silicon for its photovoltaic
business.
Affiliates of private-equity
investor Warburg Pincus LLC have hiked their stake
in Moser Baer India to 33.75% through conversion
of 47,500 Global Depository Receipts, which was
reported to the stock exchange on March 31.
After the strategic stake in Solarvalue,
Moser Baer India informed the Bombay Stock
Exchange: "Given the global demand-supply
imbalance of silicon, the acquisition will help
MBPV to have an assured supply of high-grade
solar-grade silicon."
Solarvalue
Proizvodnja plans to set up a capacity of 4,400
tonnes of solar-grade silicon by the end of 2008.
The first phase of MBPV's 80MW crystalline-silicon
plant will commence commercial production next
April.
The initial project cost is
estimated to be $58 million, with Moser Baer
investing $25 million.
Moser-Baer India
chief financial officer Yogesh Mathur said: "The
next-generation thin-film-based solar-cell unit
will provide revenue of $100 million in 2009."
A solar-cell manufacturing unit is also
being set up at Haldia in the Indian state of West
Bengal. The city-based Environment Energy Services
and US investment giant Perseus are setting up the
unit with an investment of more than Rs35 billion
with capacity to produce 5,000 tonnes of solar
cells per year.
Siddharth
Srivastava is a New Delhi-based
journalist.
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