China Ming Yang Wind Power Group Limited, a leading wind turbine manufacturer in China, today announced that Guangdong Mingyang Wind Power Industry Group Limited, a subsidiary of Ming Yang, has entered into a financing framework agreement with Reliance Power Limited and China Development Bank Corporation, a government policy bank wholly owned by China's central government, under which CDB is expected to act as the coordinating bank and lead potential lender for renewable energy projects in India to be jointly developed by Ming Yang and Reliance Power.
On July 2, 2012, Ming Yang announced that it has signed a Memorandum of Understanding ("MOU") with Reliance Power to co-develop up to 2,500 MW renewable energy projects in India within three years. Under the MOU, Ming Yang is expected to provide total engineering, procurement and construction solutions for the projects and Reliance Power is expected to play a supporting role in facilitating the projects in addition to providing local market support.
Under the Framework Agreement, being the coordinating bank and lead potential lender, CDB will act as the lead arranger to coordinate the provision of financing facilities to Reliance Power to support future renewable energy projects. The amount, terms and conditions of the financing facilities will be subject to the potential lenders' respective internal approval procedures and further assessment of the projects.
"We are very pleased to work with Reliance Power and have CDB's support for our renewable projects. This is a big step forward for all parties involved, aiming at facilitating the strategic cooperation in renewal energy development between China and India. India presents a strong growth potential for us, which is substantially reflected by Reliance Power's project pipeline."ÃƒÆ’Ã†â€™ÃƒÂ¢Ã¢â€šÂ¬Ã…Â¡ÃƒÆ’Ã¢â‚¬Å¡Ãƒâ€šÃ‚Âsaid Mr. Chuanwei Zhang, Chairman and Chief Executive Officer of Ming Yang. "Together with the proposed financial support by CDB, Ming Yang's strong expertise and innovative total solutions will be expected to help us expand more new business opportunities overseas."
China's Ming Yang out to grab 30% of Indian wind turbine market
ZHONGSHAN, China, July 5, 2012 /PRNewswire-Asia/ -- "China Ming Yang Wind Power Group Limited ("Ming Yang" or the "Company") (NYSE: MY), a leading wind turbine manufacturer in China, today announced that the Company, through Ming Yang Holdings (Singapore) Pte. Ltd. ("Ming Yang Singapore"), its Singapore subsidiary, has entered into a Shareholders Agreement and Share Subscription Agreement ("the Agreements") with Reliance Capital Limited ("Reliance Capital"), Reliance Net Limited and Reliance Shares and Stock Brokers Limited, three subsidiaries of Reliance Anil Dhirubhai Ambani Group ("Reliance"), one of India's largest private enterprises," said Mr. Chuanwei Zhang, Chairman and Chief Executive Officer of Ming Yang, in an interview with Southern Daily.
Mr. Chuanwei Zhang said in the interview: "Under the Agreements, Ming Yang Singapore will establish a joint venture with Reliance Capital and subscribe to newly issued shares of Global Wind Power Limited ("GWPL"), a leading wind power solutions provider in India and a current subsidiary of Reliance, representing 55% of its fully diluted share capital, accomplishing substantive shareholding at a consideration of US$25.0 million. In addition, Ming Yang has signed a Memorandum of Understanding ("MOU") with Reliance Power Limited ("Reliance Power"), one of the subsidiaries of Reliance, to co-develop clean energy projects with a total potential output capacity of 2,500MW in India in the next three years. According to the MOU, the Company is expected to supply multi-megawatt wind turbine, major parts and engineering services through GWPL and provide engineering, procurement and construction ("EPC") total solutions, including micro-siting, wind resource assessment studies, project financing and other services for the proposed projects, as well as value-added paid maintenance services upon completion of the projects. Reliance Power is expected to take a leading role in facilitating these proposed projects in addition to providing local market support."
"We are delighted to form this strategic partnership with Reliance, and this is a milestone of Ming Yang's development in South Asian region, and in particular India which is going to be the fastest growing renewable market in the next few years." said Mr. Zhang in the interview. "Reliance is the leading player in India's utility sector, committed to clean energy development, and our strategic partnership is another strong endorsement of our capabilities in overseas markets, where we offer total solutions by combining equipment, technology innovation and financing support. This platform between Reliance and Ming Yang will enable us to quickly capture and grow India and South Asia markets. We are confident that our international market development will gather great momentum and further drive the Company's growth."
Hiren Shah's Myths of Wind Power in India analyses the Indian wind turbine market and addresses the pressures on profit margins, the limitations of existing infrastructure, future prospects of growth for equipment vendors and the imminent entry of Chinese turbine manufacturers to India.
Hiren Shah leads Strategy and Sales for Global Wind Power Ltd, a renewable energy company and wind turbine manufacturer promoted by Reliance ADAG and other investors. The opinions expressed by the author do not necessarily reflect those of the company. The report was originally published in Renewable Watch magazine in September 2011.
INDIA: In India, the wind-energy sector is based on a business model that requires wind-turbine manufacturers to offer buyers and investors a turnkey solution. This means that manufacturers are responsible for securing land and grid connectivity as well as the supply of turbine equipment, erection of turbines, facilitation of the power-purchase agreement and lifetime maintenance.
This approach to installing wind-energy capacity has helped deliver strong growth, but there are cracks appearing that suggest change lies ahead.
One of the most persistent myths about the constraints on further wind-energy growth in India is that there is an inadequate supply of turbines. The truth is the opposite. Turbine manufacturers in India are producing at less than 50% capacity by some estimates.
The primary hindrance to further growth is, in fact, grid connectivity and land acquisition. Ironically, the core differentiator of turbine manufacturers in India has nothing to do with technology, capacity or quality and everything to do with access to a high-quality land bank on which to install their products.
Another misconception is that Indian turbine manufacturers are highly profitable. Given that manufacturing capacity exceeds projected market size, Indian manufacturers are offering a myriad of concessions to secure orders, including extended warranties, generation guarantees, aggressive delivery schedules and low-cost maintenance contracts.
India ranks fifth in the world for installed wind capacity. New capacity for 2011-12 could be as much as 3GW. With a projected short-term growth rate of 20%, India would appear able to accommodate new manufacturing entrants easily.
But consider the issue from another perspective. An equal share of the projected 3GW could give each of the 17 existing manufacturers operating in India less than 200MW. However, unless a manufacturer can scale up and deliver 500MW annually, the economics will not work out for those seeking to be long-term players, especially as the top two manufacturers already command more than 50% of the market.
Another myth about India's wind-energy sector is that Chinese turbine manufacturers will not establish themselves here. This is not the case. It is a question of when, not if. Chinese turbine manufacturers' costs are around 30-40% lower than those of domestic manufacturers. After adding logistics and duty costs, they will still likely be able to offer a 20% discount.
The turnkey model has been a huge deterrent to Chinese firms. With terminology, language and implementation varying state by state, securing sites for new turbines is not for the fainthearted.
However, canny investors and independent power producers will eventually move beyond simply deploying capital. They will explore where they can add value by taking a more active role, which may include securing land and grid connectivity. If this occurs, it would create the conditions necessary for a plug-and-play model of wind development, with Chinese entrants able to offer a cost-effective alternative to domestically produced turbines. Such structural changes have already occurred in the thermal power plant sector.
The following are steps India's wind-turbine manufacturers can take to protect themselves from future shocks: increasing scale to reduce cost; offering technologically advanced products; driving supply chains toward standardisation; remaining alert to the issue of monopoly components and raw materials; and spreading risk across a range of products. They should also be prepared for a shift away from the turnkey model.