Windmills make a comeback across windswept wastes in several states, as this alternative form of energy returns to favour Hundreds of wind generators rising above the barren ridges of Satara's hills are a sure indication of wind power's revival after a major setback of the early 1990s. Nearly 1,000 of them now speckle 35 km2 of sparsely populated Van-sukhavade in Satara district of Maharashtra. With trust once again restored and technology leaping, this industry is now well past the notoriety and adverse publicity of the 1990s . Sanjiv Bajaj, vice-president (finance) of Bajaj Auto, says: "The impression we had after the 1990s fiasco was that wind energy was one big scam, not to be touched with a bargepole." When the suggestion to invest in a wind park as a captive power option came to the Bajaj Auto board, "although it was my uncle Shekhar Bajaj who had made it, no-one was comfortable," Bajaj reveals. Yet Bajaj Auto did eventually invest in two wind farms totaling 66 mw. It, however, took painstakingly long, as the amount involved (over Rs275 crore), in what was essentially a non-core activity for the company, was too large. "It was only after the team set up especially for investigating the bona fides of wind power had made extensive inquiries and visited Suzlon that we were convinced of its authenticity," says Bajaj. In fact, in 1998, Shekhar Bajaj's Bajaj Electricals was one of the first companies to invest in wind farms in Maharashtra. Others like zf steering jumped onto the bandwagon later, investing in a 1 .7m w captive facility in 2000. Bharat Forge, on the other hand, installed 22.53 mw over two phases, in 1998, with machines bought from Enercon (India) Ltd (a 56:44 joint venture between German company Enercon Gmbh and Indian entrepreneur Yogesh Mehra). "We went in stages to get the feel of the site, machine performance, and the quality of service support," says A.S. Karanth of Bharat Forge. Bajaj Electricals and zf steering bought their machines from Suzlon Energy Ltd, the only 100 per cent Indian venture that has now joined the club of the top 10 manufacturers in the world. What gave notoriety to former wind technology ventures was "a combination of factors, consisting of some technical aspects and the unorthodox methods adopted by windmill manufacturers to make a quick buck", says an industry insider. After their initial success, these manufacturers began indulging in fictitious investments, with the sole purpose of claiming tax benefits (by availing 100 per cent depreciation) and no interest whatsoever in running the units. Having pocketed the benefits they stripped the machines, repacked and sold components, leaving behind windmill skeletons littered all across wind sites in Tamil Nadu. On the technical side, buyers unaware of the technical aspects of wind power machines bought land at windy sites without due verification of wind densities (minimum required is 220 W/m2). "Micrositing, so crucial for eventual selection of location, was ignored," says an industry expert. It was a shortcut to avoid expenditure on a very costly but highly specialised computer software (waasp) meant for careful assessment of wind densities at the potential sites. Proverbially poor post-sales service added further to the heartburn, and the absence of infrastructure for transferring huge equipment to remote windy sites complicated things; particularly for those installing a smaller number of machines. The Tanti brothers Tulsi and Girish, who ran textile unit under the name Suzlon in Gujarat, saw their opportunity in this chaos. While installing two imported wind generators all by themselves for their captive use, they sensed the opportunity in the waiting. "In those days installation support from manufacturers was very weak," says Tulsi, cmd of Suzlon Energy Ltd. After it was set up in 1994 Suzlon evolved an all-encompassing wind park concept as its main weapon to recapture lost ground. "We not only install but also maintain and service wind units on behalf our clients at the wind parks," says Tan ti. In fact, Suzlon has a round-the-clock presence at its clients' sites. Of course, now others also claim to offer similar services. The company has simultaneously developed Indian vendors. This has reduced imports to less than 30 per cent and also the machine prices. Regaining client confidence, though important, is just one aspect of the new-found interest in wind power generation. At the core is economics (additional factors in Europe and other signatory countries of the Kyoto Protocol is greenhouse reduction commitments and public pressure) of it. For one, wind generation provides security against future escalation in electricity costs, and two, it gives shield against volatility in international fuel prices. Though wind velocities fluctuate, the pattern is fairly predictable. Best winds are from 15 May to 15 September, when cur (capacity utilisation factor or plf) can reach up to 70-80 per cent. This drops dramatically after 15 September and remains range-bound at around 3-5 m/s (cut-in and cutoff speeds are 3 m/s and 25 m/s respectively) until the May of the next year, giving a cuf of around 10 per cent. Average annual cuf, of course, varies across technologies and wind sites. Tamil Nadu has the most fecund of sites in India, returning annual cufs in the range of 30-35 per cent (average wind speed of 10-12 m/s, considered to be a good wind regime). By contrast, in states like Maharashtra, Rajasthan, and Andhra Pradesh, wind regimes are of a medium range (6-8 m/s), yielding average annual cufs of 18-20 per cent; Karnataka stands somewhere in between. So how competitive is wind power in relation to conventional power, where plfs exceed 65 per cent in better-managed thermal stations? "Although at Rs2-2.50 the levelised unit costs of wind generation over the lifespan of equipment are comparable with those of conventional power stations, its the high capital-intensity of wind power that upsets its commercial viability in the short run," says Yogesh Mehra, md of Enercon India. The equipment life is of course 20 years, but loans have to be paid off in just 6-8 years, and that means rate for electrical units from this technology has to be high enough to enable promoters to pay EMI and earn reasonable profits. Although costs fall dramatically once loan repayments stop, this is hardly reassuring for financiers, who equate safety with quick payback. The Central and state governments have tried to deal with this drawback by doling out fiscal props to wind generation units. For example, the Central scheme gives accelerated depreciation writeoff of 80 per cent on equipment in the first year, and 20 per cent in the next year. There is also full income tax exemption on wind generation. Topping it all, the states, following Ministry for Non-conventional Energy Sources (mnes) norms, have been setting attractive unit tariffs for wind power generation. Some states have sweetened things up with their own set of fiscal incentives. The mines' base rate of Rs2.25 (in 1994) per unit allows annual escalation of 5 per cent in line with previous policy for ipps. Some aspects of state tariffs have been challenged by sebs (for example, in Maharashtra), but State Regulatory Commissions, while diluting benefits, have overall kept the rate (which guarantees 16 per cent assured return on equity during the loan repayment period) unchanged, on grounds that the technology is still evolving (unit costs are falling every few years with advances in technology) and needs support. "In fact most governments worldwide have adopted a similar approach," says G.M. Pillai, director-general of the Maharashtra Energy Development Agency (meda). After a recent wave of megawatt-class installations, the capital costs, which are a most crucial element of wind power costs, have already declined substantially; from over Rs5 crore to below Rs4 crore per mw. In fact new machines from Suzlon are a sophisticated piece of equipment, with lighter blades and an advanced pitching mechanism meant for low-wind sites. Intense competition is another factor driving equipment prices down. According to industry sources there was heavy price competition between Suzlon and neg Micon (100 per cent Danish subsidiary) in Tamil Nadu last year. As result capital costs are believed to have nosedived, to as little as Rs3.6 crore. Suzlon had offered its latest 1.25mw machines, and Micon its 750kW and 950kW models. Now, the latest on offer is Micon's 1.65mw machine, which is the biggest so far in India. Suzlon, on the other hand, is scheduled to commission its latest 2mw machines in April 2004. ge too is expected to soon put up its 1.5mw machine on offer. Surprising as it may seem, Enercon, one of the top three manufacturers in India and the number two in the world, has abstained from joining the megawatt race here, despite having installed the world's largest machine (4.5 mw) at Eglen in Germany. Mehra claims, "Our 600kW grid-friendly synchronous machines still have enough left for Indian market by way of enhanced effectiveness." Worldwide, of course, the breakthrough has come with the megawatt-class machines, and that's the trend. "No-one is now installing less than megawatt-size machines worldwide," says an industry expert. Rising sizes have meant two things