Suzlon to Build First Wind Plant in Latin America

Suzlon Energy Ltd., India’s top wind-turbine supplier, will invest as much as $50 million in a manufacturing plant in Brazil, its first in Latin America.

The plant, expected to be open in about 18 months, will have initial capacity of 400 megawatts a year, Chairman Tulsi Tanti said in an interview Wednesday. Brazilian banks will finance 75 percent of the project with the rest funded by equity.

“Now we have the new generation turbines and the Brazilian market has increased,” Tanti said. “The other Latin American countries are developing their renewable energy markets too, so it is a good moment to have the facility in Brazil.”

With the investment, Pune, Indian-based Suzlon may receive state-backed debt from Brazil’s development bank BNDES. To be eligible, the turbine maker must get a significant portion of its components from local suppliers, or make them domestically.

Banco Nacional de Desenvolvimento Economico e Social, as the state lender is officially known, in 2012 halted loans for developers buying equipment from turbine makers that didn’t get enough of their components from local suppliers. It tightened the rules in January and July 2013.

In 2012, Suzlon was among five companies disqualified from BNDES financing for noncompliance with the goals of nationalization of goods and services.

“We are bringing the technology to Brazil and we will develop more vendors, a supply chain, in the country,” Tanti said. “It will localize the base of the supply chain and more parts should be produced in Brazil.”

S111 Model

In three months, Suzlon will choose among the Northeastern Brazilian states of Ceara, Pernambuco and Bahia as the site for the plant. It will cost an estimated $40 million to $50 million.

Among the turbines Suzlon will produce in the plant is the 2 megawatt S111 model. Suzlon’s president in Brazil, Malmarugan Kothandaraman, estimates revenue in the country of about 600 million reais ($267.4 million) for the fiscal year 2014-15.

Suzlon has turbines facilities in India, China, Canada, Germany, Portugal and the U.S. The company has supplied turbines to Brazilian companies CPFL Energias Renovaveis SA and Queiroz Galvao SA, and has an installed capacity of 750 megawatts in the country.

(Company corrects its revenue estimate in ninth paragraph.)
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