May 3 (Bloomberg) -- Gamesa Corp. Tecnologica SA, Europe’s second-biggest wind-turbine maker, will open a third factory in India as manufacturing costs fall below those in the larger market of China.
Gamesa will build a 2 billion-rupee ($37 million) plant in southern Chennai to produce its new 2-megawatt machines, Ramesh Kymal, head of the Spanish company’s Indian unit, said today in Mumbai. The site will get 70 percent of its supplies locally by year-end, driving down output costs by 18 percent, he said.
Competition among turbine makers in China has grown amid a supply glut, putting pressure on prices as manufacturers seek to contain costs. India has now become the wind industry’s largest growth market by volume after China tightened project approvals and Europe and the U.S. reined in financing amid burgeoning debt, the Global Wind Energy Council said last month.
Gamesa got 20 percent of its sales in India last year and expects that share to climb, targeting 711 megawatts in sales by the end of December, according to Kymal. Recent orders include a 150-megawatt contract from Mytrah Energy Ltd., part of a 2011 accord to buy 2,000 megawatts of machines from Gamesa by 2016.
“We’re sold out for the year and have booked orders to September of next year,” Kymal said. An 18 percent reduction in output costs is “even more efficient than in China,” where the the selling price remains lower because of cheaper financing and other expenses, he said.
Gamesa, whose largest competitor is Denmark’s Vestas Wind Systems A/S, already produces turbine blades and towers at two plants in India. Its new factory will have an annual capacity of 1,500 megawatts and export turbines to markets including North Africa and Sri Lanka, as well as supplying local developers, Kymal said.
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