Excellent article on changes happening in wind energy sector.
● New auction policy,
● more awards,
● higher tariff,
● waiver of interest state transmission charges
● Recovering old windmills,
● offshore turbines
And many more…
Also how wind maker’s balancesheet is improving since last 2 years.
Wind energy market is indeed getting goverment’s attention and backing…
Disc: Invested in Inox wind from lower levels.
@nandan_ganatra thanks for sharing.
I would like to share my view on wind. It is not very data backed, it is basically my opinion.
On Suzlon thread I have been covering wind from December 2022 so anybody who want to understand the complete industry I would recommend to go through it.
A Grid needs 24/7 electricity hence the DISCOM cannot completely shift to RE and they continue to use convectional energy with RE. Even solar during peak time (night time) is not able to provide grid stability hence hybrid is being introduced (wind+ solar) and also during monsoon solar is not able to work efficiently.
The long term solution to this is storage. If we have solar+ storage then that can solve this problem to some extent, but currently it is not viable because storage cost is too high, hence I have feel that wind is still relevant.
If we see the economics today solar cost is around 2 INR/kwh and wind is close to 3 INR/kwh (this will further increase because of removal of E reverse) so the DISCOM have to by wind RE at a premium of 50% to 70%. The cost of storage is expected to reduce in future and it is expected that solar + storage cost can be around 3.5 to 4 INR/kwh. when this happens I believe solar + storage would be preferred as neither wind would be cheaper nor more efficient.
The ISTS wavier will end in June 2025 and hence I believe most of the C&I (retail) segment would be in a hurry to complete before 2025 thereafter I expect the demand for this segment to also be negligible. To give perspective Suzlon’s 50% current order book is from retail.
Wind is 100% dependent on government. It is not self reliant and I believe reason government is supporting is till the time storage cost does not reduce they can add wind so that they reach their targets in RE. Once solar+ wind is viable I think they would focus more on solar.
All the things above is just my view and I can be wrong but I believe next 1.5/2 yrs is very positive for wind but I am not a long term investor here just want to make quick money. I feel in long term the survival of this industry is questionable
DIsc- exiting suzlon, invested in inox
@manhar you have studied this sector well…
However I disagree on some of the parts.
In general, Goverment dont think about taking short term benifit from a sector. ( unless it is politically motivated/ election policy, and this doesnt look like one of them ). They always have a broader perspective of their policies. Weather those policies succeed or not is a different subject altogather.
ISTS is till 25, but we dont know, if thats the end to that or govt. gives extension to it.
World is changing at a rapid pace now a days, and we may get a surprise for the sector…
2.Orderbook is rising for sector and we will have to keep close eye on it from sector perspective. Thisbis just first real year from that perspective.( another data that we have at the moment ).
All in all, I personally don’t think that its just a 1.5 year story ( as it will take atleast 1.5/2 years to commission wind mills of such large INITIAL ORDERS )
This sector is like dead/ doesnt exist for investor community. Just for example: in last concall of inox wind: It just lasted 24 minutes and no analyst question / interest from analyst community.
Having said that I will assess results/ other aspects on half yearly basis…
Lets keep learning and share our learnings about this sector…All the best.
Was wondering if there is another way to play this sector via a pick-and-shovel investing. For e.g. Sanghvi Movers caters to this sector. Are there any other listed co’s to play this theme ?
A very interesting and insightful blog on tailwinds and hiccups on Wind Energy Industry. I don’t think this has been shared here yet, so just sharing the link.
Approval for 3MW from TUV
@manhar any comments on the Q1 results. It has turned EBITDA positive for first time in five years. With debt repayment, its matter of time that they turn PAT positive.
Inox Green has turned PAT positive though.
Thanks
Hi,
It is a pretty decent result
2… They still have 50MW of nani virani to be sold and they have been executing a 150MW NTPC order since august 2022 and it is still under execution so does the recognition happens after 100% execution or some other way. If it happens after 100% then this should reflect in Q2 or max Q3 this is like approx. 700cr.
As of now I can see this 200MW definitely coming up in Q2 or Q3. Now form H2 I have higher expectation and next quarter is monsoon season so I don’t have high expectation for Q2 as well. It would be grate if this 150MW NTPC comes up in Q2.
After con call I will have better understanding and as of now I am confident of them at least doing 2000cr.
I would urge everybody to go through my recent Suzlon post which gives a good Idea on valuation which I feel wind companies deserve. Is Suzlon a turnaround story after FY16 - #516 by manhar
This year for me the key thing is top line and leverage because I don’t have big expectation at PAT levels.
Great, thanks for the detailed reply.
Do you have any fair valuation estimation for Inox Wind in terms of market cap? The real numbers will start from FY25 onwards and continue for next 3-4 years.
Thanks
500cr block deal happening tomorrow…promoters are selling…Would be very interesting to see who is going to buy…A renowned fund entry will be a very good sign!!!
back of envelope calculations
Reliance AGM announcement of foray into wind energy is a material risk for wind turbine maufacturers.
Apart from tech collaboration, reliance wants to manufacture at scale carbon fibre, which is used in making wind bades
Wind power Capacity added during 23/24
( From april to july ): 1306 MW
last year addition: 2276 MW
So, Already 60% Capacity of last year added in 4 months of this FY.
Growth in the sector is clearly visible
Source: Windpro / Indian wind turbine manufacturer association.
If the 290cr above is yet to be received then next quarter we can see 500cr of revenue, plus they will supply 3.3MW from Q3
For H2 1000cr revenue is now visible to me with better clarity, For Q4 if they can complete the 100MW balance NTPC that would itself be 450cr to 500cr of revenue and on top of the the O&M revenue would add. This year they would execute 350MW to 400MW and their guidance was of 500MW
Next year they would only do 3.3MW, so now their capacity is 2GW turbine and 1.6GW blades, So now in H2 I expect them to win some 300MW of order , 1000cr of revenue and debt free
From the day I sold 50% of my Suzlon position and bought INOX ,suzlon has gone up by 120% and inox 40%, I expect INOX to catch up now, lets see
DIsc - invested
I watched the last few interviews given by Devansh Jain to media houses. One thing that stood out was that he never fails to stress the anticipated growth in the ‘next couple of quarters.’
On one hand, he sounds extremely optimistic about the sector; on the other, he places an overemphasis on just a quarter or two.
Sure, order book visibility will emerge with time, but I just wanted to check with others if I’m missing something. Perhaps I’m reading too much between the lines.
Here are some notes from their last concall…
So, Inox wind is talking about next 18-24 months in concall and frankly speaking I dont think any management can give guidance beyond 2 years.
It all depends on how much of that “10 GW / year” order is given by new goverment of 2024 in the future period.
Disc: Invested, biased views
One thing beyond my understanding is that DII stake sharply went up in Inox Wind whereas the FII and DII stake in IWEL is decreasing.
Wind power
Diff between technology of old turbine of early 2000 & New 3.3 MW turbine of 2023.
Double MW capacity & upto 800% energy can be generated in the same area.
Source: Windpro
Govt. has come out with a fresh policy for repowering old wind mills below 2MW capacity. The compensation under the scheme is detailed Page 8 onwards. They want to target 25GW worth of old wind mills under this policy. If even 50% of the capacity comes forward for repowering, that can be a great further demand driver for Wind OEMs.
D4mHqmI5TydoiPXborrTnwJQ07jXbjaTKixr5Fe4iIayf3cMivzU5.pdf (854.7 KB)
