The licence deal is heralded as a precursor to a possible joint venture company, already named Essar Repower India. It is expected to be producing turbines next year. A location for a factory, which Essar says will be near a port, is expected to be finalised shortly. Both Hazira and Bhuj in Gujarat are cited by industry sources as the two mostly likely locations. The initial cost of the plant, $11 million, will be financed through internal resources.
With Essar already involved in steel production, construction and power generation, the two firms hope to expand their co-operation further. "Besides towers specially developed for using Essar's steel plates grade, we also plan to cooperate on 37 metre blades designed by Repower," says Repower's Carsten Corino. The companies will also examine options for building up a local gearbox supply.
Essar has been in the power generation business for ten years, operating 1000 MW of conventional plant. Its new subsidiary, Essar Wind Farms, plans to develop 300 MW of wind plant by 2010. It has already secured land for 100 MW in Tamil Nadu and is seeking sites in other states including Maharashtra, Gujarat, Karnataka and Rajasthan. It hopes to supply most, if not all, of its projects with machines from the new joint venture.
"The agreement comes at a time when there is a huge demand for power in India and it also fits in perfectly with our strategy of diversifying into renewable energy sources," says the company's Anshuman Ruia. Essar says it expects to also be producing Repower's 3 MW and 5 MW machines at a later date. "The market eventually will mature for large size wind turbines as land availability becomes important," says Essar's Manish Kedia.