Factors Affecting Wind Energy Segment
The relationship between economic growth and wind energy segmentcan be given by:-High Economic Growth=High Industrial Production=High Demand for Electricity=Better Sales Possibilities for Wind Energy Industry.Demand for electricity depended on the economic growth of India and countries, such asUSA and China that are huge market. As a result any economic downturn in theseeconomies will have an adverse impact on Suzlon’s business and financials.
Current & Future Outlook of GDP
Despite the global financial crisis Indian economy registered GDP growth of 6.1% in thefirst quarter of 2009-10 positioned against the growth of 5.8% in the previous quarter and7.8% in the same period of the previous year. Such impressive performance substantiatesIndia’s position as one of the best performing economies. Owing to which CII has raisedthe growth target for 2009-10 to 6.5-7.0 percent
The demand for wind power plants is dependent on the cost of wind-generated electricity compared to electricity generated from other sources of energy.Hence, limited cost and supplies of oil, coal and other fossil fuels are key factors indetermining the effectiveness of wind power.
Wind farm project require higher upfront capital investment per kWh of energy produced when compared to fossil fuel-based power plants. As a result conditionand availability of financing availed for wind power project significantly affects the business, financial condition and results of operations. Higher interest rates increase thecost of investment, making investment in wind energy less attractive.
Investment in wind power projects is considered to be riskier.
The refinancing of wind power project is done at a higher rate.
Project funding has taken a hit due to non availabltiy of credit in the wake of financial crisis
: Wind Power Industry worldwide is supported by grants andseveral government initiatives and incentives. Hence, any elimination of the following caneliminate the competitive advantage of the industry.Current State
Indian and global government have enacted have enacted legislations to promote expansion of renewable energy sources.
Fiscal incentive scheme, tax incentives and public grants, such as referentialtariffs on power generated by WTGs or tax incentives promotinginvestments in wind power.