Spanish wind energy firm Gamesa announced its re-entry into the solar energy sector last week, which it had exited globally in 2004., chairman and managing director of Gamesa India, tells T E Narasimhan the strategy behind the re-entry. Edited excerpts:As a global company, we are a strong player in wind energy - be it in Brazil, India or Mexico. We want to leverage our business here, win client confidence, build customer base, rope in the requisite skills, expand our manufacturing and research & development capabilities, and strengthen our supplier base before exploring solar.

The opportunity in solar is abundant and we need to be cognizant of the fact that only 3.8 Gw out of the potential 750 Gw has so far been harnessed. Of late, largely due to our energy crisis, the government has taken some encouraging steps toward renewable energy. Having attained the desired market leadership in wind energy, we are confident that our venturing into solar energy will find favour with the right audience.

Would you be starting solar business in other countries after India?



Gamesa’s key focus is currently limited to India. We are now channelising our efforts to meet the timelines for commissioning the 10 Mw order in Tamil Nadu. We are confident of strengthening our order books by the end of the year by reaching out to our existing client base. We’ll explore the possibilities in other markets at an appropriate time, if opportunities arise.

Which are the focus segments and what are the challenges ahead?



Currently, Gamesa is focused on grid-connected utility-scale wind and solar projects. In the solar space, we’ll be concentrating on industrial and commercial rooftop projects across India. We’re also exploring various avenues to tap into the huge possibilities available in village electrification through micro-grids.

Non-compliance with renewable purchase obligation, insufficient grid evacuation facility, a national-level uniform policy framework, etc are among the challenges faced by the sector.

With 100 Gw of wind power and 750 Gw of solar potential in the country, India is high on renewables. We see India as a growth market with various national-level and state-level policies driving the renewable capacity addition across the country. Various government incentives such as ‘accelerated depreciation’ and ‘generation-based incentives’ are big drivers for the sector. Attractive feed-in-tariffs offered by various states are positive signs for investors to ramp up their capacity addition in India.

We will ramp up our capacities. Wind energy is our main stream of growth. In FY15, we completed wind projects totalling 657 Mw and plan to complete 1,000 Mw this year.

Gamesa announced its re-entry into solar a week after Gamesa-SunEdison announced a tie-up globally. Does it have anything to do with the re-entry?



This global association is specifically for us to unlock our synergies in wind energy where SunEdison will co-develop wind energy projects up to 1 Gw with Gamesa. This is not connected to our entry into solar.

Can you elaborate on the Gamesa-SunEdison tie-up and what are the plans for Gamesa-SunEdison in India?



It is a positive development for the Indian market. Under the terms, the two would set up a joint venture 50 per cent owned by each party for the co-development of wind projects, selected by SunEdison from Gamesa's global pipeline, with a focus on India and Mexico in the wind business. This arrangement is currently in the MoU (memorandum of understanding) stage and is expected to be firmed up by end-2015.

You’ve announced Rs 800 crore investments in India over the five years. Where will you deploy the money?



The investments will be spread across different verticals in our value chain. Predominantly, the investments will go into developing suitable infrastructure for our projects. We will also be channelising the investments in expansions at our current nacelle and blade facility in Tamil Nadu and Gujarat, respectively. Development of tools for our construction and erection activity and moulds for our existing and new models for India will be the other beneficiary of our investments. The current facility in Tamil Nadu has a capacity of 1,500 Mw. With these investments, we will be geared to meet the demands of the increased growth projections in the country.

How will it be funded?



We’re planning these investments through our internal accruals/debt.

Does the government sector offer good business opportunities for you?



The government sector has been pushing for renewable energy. Many public sector undertakings (PSUs) have renewable energy targets and have announced huge capacity addition targets, too. Gamesa has been active across all business segments in India. PSUs are among the most important customer segments for us. We have done reasonable capacity additions within the country with customers such as Oil India, Nalco etc.