German engineering giant Siemens has announced plans to set up a wind turbine manufacturing facility having an annual capacity of 250 MW in India. The first turbines from the plant are expected by 2012.

Siemens (SIE.DE) which is one of the leading wind energy firms in the world has big plans for India. It recently launched its renewable energy business in India. In addition to wind energy, it is also planning investments in solar energy.

India is one of the leading wind energy markets with an installed capacity of over 12,000 MW which constitutes almost 70 percent of its renewable energy capacity. The growth of local companies like Suzlon Energy (SUZLON.BO) which is now the world's third largest and Asia's largest wind energy company by market share. With acquisitions of Hansen Transmissions and RePower it has gained exposure to the state-of-the-art European wind energy technology.

The wind energy sector has matured a lot more than any other renewable energy sector in India. It enjoys much more favorable tariffs making it attractive to the distribution companies. Additionally, new wind energy projects do not face as strict a scrutiny as the solar energy plants and banks are much more willing to agree to provide the financing.

While some would say that Siemens has arrived late to the party, it is essential to note the tremendous upside that still remains in the Indian wind energy sector. According to a recent study done by the Global Wind Energy Council and the Indian Wind Turbine Manufacturers Association, if supported by national level mission, wind energy could contribute as much as 24 percent (about 228 GW) of the total power demand in India by 2030.

By official estimates, India's wind energy resource is around 48,500 MW. However, this estimation was done decades ago using wind masts of 65 meters whereas several companies including Siemens and Suzlon Energy now supply towers exceeding 80 meters which can harness much more energy from winds at higher speeds.

There has been no estimation of India's offshore wind energy resources yet. With one of the longest coastlines in the world India's offshore wind resources can easily exceed the terrestrial resources. Siemens has considerable experience in the offshore wind energy sector whereas Suzlon Energy and other local companies have none.

With a diverse portfolio of renewable energy products, entry into India has opened doors to potentially very high revenue streams for Siemens. Now the German company needs to ensure that it grabs as much market share as possible through smart pricing and brand marketing.

Hat tip: Business Standard
Image: DWIA (Flickr)/ Creative Commons

The views presented in the above article are author’s personal views and do not represent those of TERI/TERI University where the author is currently pursuing a Master’s degree.