Siemens has launched its renewable energy business arm in India to get a sizable share in one of the fastest growing markets in the world. The German engineering giant has opened its business in India at just the right time given the abundant economic and policy incentives offered by the government to the project developers as well as manufactures in the renewable energy sector.
Siemens has launched its renewable energy business arm with 30 employees and intends to add 70 more over the next one year. The company would reap tremendous benefits due to its presence in the Indian renewable energy sector. India is one of the fastest growing renewable energy markets with the wind energy sector expanding at a healthy double-digit growth rate. The country is also blessed with significant solar energy resources and the solar manufacturing is on the brink of a boom.
The Indian government has initiated the first phase of its ambitious National Solar Mission which aims at installing 20,000 MW of solar energy systems by 2022. The government has already approved projects for the first 1000 MW of solar power plants which are to be installed till 2013. Out of the 1000 MW, 500 MW would be concentrating solar power systems.
The government is offering cheaper loans and handsome tariffs to the project developers of solar energy power plants. The government has set up funds to stimulate investment in the renewable energy sector, it has also set up security fund to ensure guaranteed returns to the project owners. However, these and several incentives will be offered only to those projects which use equipments made in India, a step taken to promote investment in the manufacturing sector.
Since the manufacturing sector of renewable energy equipment is still in its nascent stage in India, several project developers import solar panels, concentrators and other equipement from other countries like the United States. The entry of Siemens would give project developers a cheaper option.
Siemens will set up manufacturing facilities for wind turbines in India and could set up similar facilities for solar panels, concentrators and other equipment. It would enjoy an edge over the domestic manufacturers due its technical expertise and low production cost would serve as an attractive add-on.
The wind energy sector leads every other sector in the renewable energy basket. Wind energy experts believe that the Indian wind energy resource has been underestimated at 48,500 MW as this estimate was made when taller and high capacity wind turbines were not available. With the sprouting of domestic players and arrival of international players into the Indian market the wind turbine costs have gone down and many public as well as private industries entities setting up wind farms. Additionally, there are no estimates for the offshore wind energy resources which could far exceed the terrestrial wind resources.
Thus Siemens has potential of growing rapidly in a diverse business environment. The company enjoys the leverage 0f being a well-established brand and has access the latest technology which it can transform into affordable products with the low production costs.
Image: Worklife Siemens at Flickr (Creative Commons)
The views presented in the above article are author’s personal views and do not represent those of TERI/TERI University where the author is currently pursuing a Master’s degree.
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