Suzlon Energy Says Indian Clients May Produce Less Electricity

By Dinakar Sethuraman

Sept. 9 (Bloomberg) -- Suzlon Energy Ltd., the world's fifth-biggest wind-turbine maker, said customers in India may generate less electricity from its equipment because of fluctuations in wind velocity and breakdowns in the power grid.

``Last year the wind velocity in India was 20 percent lower and it may be 10 percent higher this year,'' Chairman Tulsi Tanti told reporters in Singapore today, when asked to comment on a report that customers had complained about the quality of its turbines. ``We guarantee the equipment, but we can't guarantee the power produced in India as we have no control over the wind and the grid.''

Customers in India say Suzlon's wind turbines produce less electricity than promised and vibrate excessively, the Wall Street Journal reported on Aug. 25. Shares in the Ahmedabad- based company have fallen 39 percent this year after its V2 series blades cracked and a unit of Southern California's Edison International canceled an order for 150 turbines.

``The power generated by the turbines in India varies and evens out in the long run over seven to 10 years,'' Tanti said.

The company set aside $30 million in the fourth quarter of the year ended March 2008 to retrofit the V2 blades series, which number about 400, Tanti said. The affected blades constitute 2 percent of the company's total turbines and there are no complaints about the new V3 series, he said.

Suzlon fell 0.4 percent to 234.85 rupees at 11:37 a.m. in Mumbai trading.

Compensation

Suzlon has set aside 5.9 billion rupees ($131 million) as provisions for meeting guarantee and warranty obligations, the company said July 10.

The Suzlon group, including Repower Systems AG and Belgian gear-box maker Hansen Transmissions International NV, may spend $1 billion on research to develop bigger and more efficient turbines, Tanti said, reiterating spending plans first announced by him last week.

Investments in research may be funded from internal cash flow and the company aims to reduce the generation cost for wind turbines by 15 percent over five years, he said.

Suzlon and Repower have jointly set up a research unit in Hamburg. The unit, Renewable Energy Technology Centre GmbH, will focus on research and technical training in wind energy, according to Suzlon's annual report.

To contact the reporter on this story: Dinakar Sethuraman in Singapore at dinakar@bloomberg.net.