Draper Fisher Jurvetson-backed Bharat Light & Power Pvt. and International Business Machines Corp. (IBM) are combining efforts to boost the electricity output of wind farms in India, seeking to expand capacity fivefold.
Under a 10-year agreement, IBM’s technology will raise the profitability of Bharat Light projects by better managing wind-farm data, said Balki Iyer, chief development officer of the renewable developer founded by the former country head of General Electric Co. (GE), Tejpreet S. Chopra.
Clean-energy utilities such as Bharat Light and Morgan Stanley-backed Continuum Wind Energy Pte are sparking a shift in India’s wind industry by focusing on maximizing generation as they compete against fossil-fuel plants to deliver power. India, fighting blackouts that restrain its growth, is trying to cut dependence on imported fossil fuels and double clean energy capacity to about 59 gigawatts by 2017.
“These projects are usually located in very remote parts of India and the level of intelligence dispatched from the field is low,” Iyer said today in a phone interview. The collaboration with IBM will allow Bharat Light to generate power at levels “way beyond” what wind farms, often managed by turbine suppliers in India, currently can do, he said.
Wind farms are already able to supply power at the same cost or cheaper than new coal-fired plants in some Indian states. That trend was helped by falling turbine prices, down a quarter from their 2009 peak amid global oversupply, as well as newer machines that produce more power at lower wind speeds.
“There is only so much you can do to improve existing turbines,” Iyer said. In contrast, raising the operational efficiency of remote wind farms by just 1 percent can lead to a “huge” increase in revenue. Continuum Wind Chief Executive Officer Arvind Bansal said Oct. 29 that generation losses at Indian wind projects can be reduced from 6 percent to less than 1 percent by managing assets better.
Clean-energy utilities such as Bharat Light, backed by Menlo Park, California-based venture capital firm Draper Fisher Jurvetson, which bet early on such companies as Skype Inc., and Continuum are expanding faster than traditional wind-farm investors that are exiting the market after the expiration of a tax break.
Most of India’s 20,000 megawatts of wind capacity was built claiming tax breaks, leading to small holdings that owners often allowed to rust and idle once the depreciation benefits were claimed.
IBM’s technology will also help Bharat Light comply more easily with a government directive on July 15 that ordered wind farms to forecast day-ahead power output or face fines, Iyer said. Goldman Sachs Group Inc.’s ReNew Wind Power Pvt. and Tata Power Co. (TPWR) say the rule would wipe out industry profits because it’s too difficult to meet.
India’s fragmented wind industry is ripe for mergers and acquisitions as indebted companies such as property developer DLF Ltd. and truck maker Ashok Leyland sell off wind portfolios built for tax breaks, according to Bloomberg New Energy Finance. Such assets can be bought for less than half the cost of building a new wind farm, according to Mumbai-based developer Ushdev Power Holdings Pvt.
Bharat Light owns about 200 megawatts of operating wind farms, including 150 megawatts of capacity acquired from DLF in July. It plans to diversify into solar, biomass and hydropower to reach 1,000 megawatts in five years through acquisitions and by building projects, Iyer said.
The developer is in talks with potential overseas investors to help fund that growth, he said, declining to elaborate.
IBM is combining efforts with Bharat Light in “a sunrise industry,” Ajoy Menon, a director at IBM in India, said by phone. “We’re betting on renewables.”
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