Wind energy is making a strong comeback. Here's all that you need to know about the sector and our investment thesis on Suzlon Energy.
A thread.
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A thread.
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โป๏ธโก๏ธ India's total installed Renewable energy capacity at 2022 end was 166 Gigawatt (GW) comprising of:
- Solar: 62 GW
- Wind: 42 GW
- Biomass: 10.7 GW
- and balance others
To meet Indiaโs publicly announced Green targets, this capacity has to treble to 500 GW by 2030.
โป๏ธโก๏ธ India's total installed Renewable energy capacity at 2022 end was 166 Gigawatt (GW) comprising of:
- Solar: 62 GW
- Wind: 42 GW
- Biomass: 10.7 GW
- and balance others
To meet Indiaโs publicly announced Green targets, this capacity has to treble to 500 GW by 2030.
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India will auction 50GW of renewables annually for next 5 years of which 10 GW of bids are to be for Wind and balance 40GW across solar, solar-wind hybrid, hydro, etc. Including hybrid, total Wind auctions could be ~15GW each year.
And the uptick is showing in new awarding ๐
India will auction 50GW of renewables annually for next 5 years of which 10 GW of bids are to be for Wind and balance 40GW across solar, solar-wind hybrid, hydro, etc. Including hybrid, total Wind auctions could be ~15GW each year.
And the uptick is showing in new awarding ๐
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Recent policy changes to give a push to wind energy:
The key changes include:
- 10GW of dedicated new auctions/ year
- Doing away with reverse bidding auctions and shifting to single-stage two envelope closed bidding
- Simplifying operational issues
More details:
Recent policy changes to give a push to wind energy:
The key changes include:
- 10GW of dedicated new auctions/ year
- Doing away with reverse bidding auctions and shifting to single-stage two envelope closed bidding
- Simplifying operational issues
More details:
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Why are Hybrid projects picking up?
A grid needs 24x7 power. Wind is more consistent and it also generates higher power in monsoon, when solar is weak.
A combination of solar + wind is more reliable for the grid with lower variation vs only solar generation.
Daily profile:
Why are Hybrid projects picking up?
A grid needs 24x7 power. Wind is more consistent and it also generates higher power in monsoon, when solar is weak.
A combination of solar + wind is more reliable for the grid with lower variation vs only solar generation.
Daily profile:
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Another advantage in support of wind is that the storage of generated power is 3x cheaper than Solar battery storage, which is not fully viable in near term.
More details:
Another advantage in support of wind is that the storage of generated power is 3x cheaper than Solar battery storage, which is not fully viable in near term.
More details:
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Considering above factors, we expect Wind market to grow at 35-50% CAGR for next 5 years (based on scenarios)
With a combination of various policy actions and an increase in industrial power demand, we believe the wind industry is finally set to turn the corner.
Considering above factors, we expect Wind market to grow at 35-50% CAGR for next 5 years (based on scenarios)
With a combination of various policy actions and an increase in industrial power demand, we believe the wind industry is finally set to turn the corner.
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This brings us to Suzlon Energy (buy: TP of Rs 22)
- Market leader with 33% share in Indian market installations (14GW out of 42) and over 20GW of operational wind power capacity globally
- Well ahead of competitors in both capacity and its technology (R&D in Germany)
This brings us to Suzlon Energy (buy: TP of Rs 22)
- Market leader with 33% share in Indian market installations (14GW out of 42) and over 20GW of operational wind power capacity globally
- Well ahead of competitors in both capacity and its technology (R&D in Germany)
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We believe Suzlon is getting back into good shape after a โrollercoasterโ journey over the last decade - ICICI Securities
It was earlier impacted by a combination of slump in industry volume and high debt post acquisition of
Repower in 2008.
Let's look at the new Suzlon.
We believe Suzlon is getting back into good shape after a โrollercoasterโ journey over the last decade - ICICI Securities
It was earlier impacted by a combination of slump in industry volume and high debt post acquisition of
Repower in 2008.
Let's look at the new Suzlon.
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The new Suzlon:
Repaired its balance sheet in FY23 - net debt to EBITDA of ~1x versus 10x in FY22 via:
a) Conversion of debt into equity
b) Raised Rs75 Bn via rights issue
Orderbook has improved to 1.5GW, a healthy 2x book to bill ratio.
Key events in Suzlon's history:
The new Suzlon:
Repaired its balance sheet in FY23 - net debt to EBITDA of ~1x versus 10x in FY22 via:
a) Conversion of debt into equity
b) Raised Rs75 Bn via rights issue
Orderbook has improved to 1.5GW, a healthy 2x book to bill ratio.
Key events in Suzlon's history:
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Suzlon has reduced its debt from Rs 130 Bn to Rs 19 Bn in FY23 and plans to soon become debt free as per management.
Here is a detailed breakdown on what happened in the company (Suzlon) in the last 5 years (the last point is important for future roadmap):
Suzlon has reduced its debt from Rs 130 Bn to Rs 19 Bn in FY23 and plans to soon become debt free as per management.
Here is a detailed breakdown on what happened in the company (Suzlon) in the last 5 years (the last point is important for future roadmap):
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We believe Suzlon has a superior capability over peers to win the shift to wind:
- In-house technological innovations via its R&D centre in Germany
- Its latest 3MW turbine can operate at sites with low wind speed which is suitable for Indian markets & winning big orders
We believe Suzlon has a superior capability over peers to win the shift to wind:
- In-house technological innovations via its R&D centre in Germany
- Its latest 3MW turbine can operate at sites with low wind speed which is suitable for Indian markets & winning big orders
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Suzlonโs recent product lines (S144- 3W MW series) will have better realization (than earlier versions) with wider rotor diameter - higher energy output at lower cost.
It continues to introduce improved turbines, more suited for new wind sites.
suzlon.com
Suzlonโs recent product lines (S144- 3W MW series) will have better realization (than earlier versions) with wider rotor diameter - higher energy output at lower cost.
It continues to introduce improved turbines, more suited for new wind sites.
suzlon.com
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Financials:
1. We expect Suzlon's EBITDA growth to be largely driven by higher volume and we estimate EBITDA of Rs 1600 crore in FY25E vs ~Rs 800 cr in FY23
2. With 37% revenue CAGR (FY23-25) and inteest cost savings, we expect it to generate Rs 1100 cr profits in FY25
Financials:
1. We expect Suzlon's EBITDA growth to be largely driven by higher volume and we estimate EBITDA of Rs 1600 crore in FY25E vs ~Rs 800 cr in FY23
2. With 37% revenue CAGR (FY23-25) and inteest cost savings, we expect it to generate Rs 1100 cr profits in FY25
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Key risks to note: While directionally things look bright for Wind Energy and Suzlon, here are the risks one should take into consideration:
Key risks to note: While directionally things look bright for Wind Energy and Suzlon, here are the risks one should take into consideration:
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