Suzlon To Pick And Choose High Margin Orders; Execute 50% Order Book In FY24
The National Green Hydrogen Mission will throw up additional opportunities for the wind sector, the company says.
Suzlon Energy Ltd. will pick and choose high margin orders as the demand for wind turbines and generators have shown improvement after a lull of five to six years, according to its Chief Financial Officer Himanshu Mody.
The government initiatives of doing away with reverse auctions, inviting two-envelope closed bids, price pooling of wind tariffs and waiver of interstate transmission charges will lead to strong demand for wind turbines as India will strive to achieve its 2030 renewable energy target, said Mody.
The company reported strong operating margins in the fourth quarter of fiscal 2023 even as sales declined, as it turned the focus on high margin projects. It helped the company turn profitable, Mody told BQ Prime in a telephonic interview.
CFO Himanshu Mody. (Source: Suzlon Energy website)
In the previous fiscal, Suzlon supplied 664 megawatts of wind turbine generators in comparison to 808 MW in FY22, he said.
Suzlon has an order book of 1.5 gigawatts as of March 31, 2023, and it plans to execute around 50% of it in the current fiscal and the remaining in fiscal 2025.
The company received a Rs 1,000-crore working capital loan in the previous fiscal and had Rs 500 crore working capital in FY22. "We believe the working capital is sufficient to execute our FY24 order book target," Mody said over an analyst call.
The company is hopeful of bagging sufficient orders from the developers bidding under the Renewable Energy Implementing Agency-wise monthly bidding plan for renewable energy capacity for the current fiscal. Out of the total 50 GW annual renewable capacity that will be required to meet the 2030 target, 10 GW will be contributed by the wind sector.
According to the plan, bids of 2.5-GW capacity will be invited by each REIA. Solar Energy Corp. will invite the 2.5-GW capacity bids in May, followed by NTPC Ltd. in July; NHPC Ltd. in December and SJVN Ltd. in March, according to the Ministry of New and Renewable Energy's letter to the implementing agencies in April.
With the ISTS charge waiver of 25 years to projects commissioning before June 31, 2025, a lot of commercial and industrial players and corporate power purchase agreement market will hasten to complete their projects before time. That will be a big positive for companies like Suzlon, according to Mody.
He sees strong potential in the wind repowering business. Around 25.4 GW of old wind turbine generators of less than 2 MW capacity can be replaced by large WTGs at the same location, saving on land cost and issues of right of way in the future.
According to the company, the National Green Hydrogen Mission, which targets a capacity of 5–10 million tonne per annum by 2030, will require an additional 125–250 GW of renewable energy capacity by 2030. It will throw up additional opportunities for the wind sector.