India

India

The challenges facing Suzlon's new CEO

Suzlon's new CEO, Ashwani Kumar, will need to draw on all his 30 years of experience in the energy business to restore the Indian turbine manufacturer to profitability

New boss Ashwani Kumar will need to adapt Suzlon to a future where wind is bundled with other forms of generation
New boss Ashwani Kumar will need to adapt Suzlon to a future where wind is bundled with other forms of generation

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Suzlon's new CEO, who replaced the outgoing JP Chalasan in October, brings a unique mix of leadership experience to the Indian turbine maker.

In his previous role as head of energy business vertical at IL&FS, Kumar oversaw over 900MW of operational wind and solar projects and was instrumental in developing new business and power sale models with the government and the corporate sector.

Kumar also oversaw the stake sale of more than 700MW of wind assets to Orix Corporation of Japan.

Before his stint at IL&FS, he led the power development business – heading the thermal and hydro projects portfolio – of Larsen and Toubro (L&T), one of the largest infrastructure development players in India, in addition to leading its corporate affairs division.

Kumar has also served as president of corporate development for Reliance Power, one of the largest private sector utilities in India.

Debt-free new dawn

He takes up the helm at Suzlon at a difficult, but also promising time.

The successful completion of the company's debt restructuring followed by internal restructuring has helped reduce its interest costs by 70% and fixed costs by 30-40%.

The company expects that the leaner cost structure coupled with its huge manufacturing base and an existing order book of 876MW will help it to bounce back in the market and return to profitability by 2022.

Challenges ahead

However, Suzlon faces many challenges in India.

The government is moving away from pure-vanilla wind tenders to hybrid varieties including wind-solar hybrid, wind-solar-storage hybrid, bundled energy tenders (where renewables are bundled with conventional power) and peak supply tenders.

In this new tender power play, Siemens Gamesa and GE – with their broader expertise across the power sector – may have a competitive edge in the short- to medium-term.

Suzlon will have to work on creating the necessary collaborations and technological offerings for staying competitive in this area.

Another area beyond the federal auctions are the tender opportunities from the states and from large public sector utilities (PSUs).

State tenders have not really taken off because of lower participation due to offtake risks. Tendering by PSUs could be a game changer – especially for Suzlon – as it has been strong in this segment. However, as of now, there has been no major development in this area.

The third market opportunity is the private sector with commercial and industrial (C&I) companies.

The open access regulations allow all C&I players with demand greater than 1MW to procure power on their own either through setting up their own sources of generation or through private sale contracts with generators. In addition, large industries having their own conventional generation units are also required to meet renewable purchase obligations that would require them to purchase wind power.

With nearly 8GW of wind capacity already serving the C&I market and an annual market size of about 0.7-1.4GW (GWEC), this segment would offer better promise in the near future.

In the given context, the appointment of Ashwani Kumar is expected to help Suzlon deep dive into the existing and new market opportunities.

An alumnus of Harvard Business School with significant expertise in corporate engagement, corporate affairs in addition to a deep expertise in power sector project development, asset valuations, power sale models, Kumar can be instrumental in forging new collaborations with businesses and governments in the new market dynamics.

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