The Hindu Business Line : A back-up and an investment

FOR A number of companies, especially those in power intensive sectors, wind power provides an ideal alternative to costly grid power or expensive captive power based on liquid fuel. Wind power provides a hedge against rising power costs. For some firms, it is an attractive investment option and for others, it is as much a step to contain fuel costs.

For instance, Tamil Nadu Newsprint and Papers Ltd, promoted by the Tamil Nadu Government, has 21.75 MW of installed wind turbine capacity in south Tamil Nadu and plans to add another 5 MW during the year. The company generated over 348 lakh units in 2004-05 and earned a profit of Rs 1.94 crore, selling all the electricity to the grid.

In contrast, Madras Cements Ltd, according to Mr A.V. Dharmakrishnan, its Senior Vice-President (Finance), "invested in wind power as a hedge against rising cost of grid power." This Ramco group company was a pioneer investor in a non-conventional energy source, and has wind farms at Muppandal in south Tamil Nadu. Cement is an energy-intensive industry and power costs account for nearly 30 per cent of variable cost.

Madras Cements has an installed capacity of 34.4 MW of wind power, of which 33.2 MW is in Tamil Nadu, and the rest in Karnataka. The power generated from its wind farms meets 60 per cent of the requirements of its RR Nagar plant in Tamil Nadu.

The wind power division generated 445 lakh units in 2004-05 and earned Rs 16.14 crore. "Even today our older machines give us Rs 15-18 crore revenue for the Rs 100-crore investment," says Mr Dharmakrishnan.

Madras Cements plans to add another 6 MW in Tamil Nadu and 4.8 MW in Karnataka, where it has a plant at Mathodu. With the additional capacity in Tamil Nadu, wind power will meet 85 per cent of the RR Nagar plant's electricity requirement and that in Karnataka 55 per cent of the Mathodu plant's demand. The company's idea is to reduce its dependence on grid power as much as possible.

The Ramco group, which is also into cement fibre sheets and has a number of textile companies, has a total installed wind power capacity of 72 MW and plans to increase capacity during the year.

Mr Dharmakrishnan points out that Tamil Nadu's policy favours captive use of wind power.

A reason for the State surging ahead in installed wind power capacity was the Technology Upgradation Fund (TUF) scheme for the textile industry with mills in the Coimbatore region taking to this other energy source in a big way. But what has come as a dampener is the Textile Ministry's circular denying the benefits of this scheme — a 5 per cent interest subsidy — to wind mills sanctioned after February 22, 2005.

The Ministry's argument is that the scheme was conceived to help the textile industry bring in new plants and expand capacities to be able to compete in a global market without any quota restrictions. But the industry was using it more for installing wind turbines rather than for textile machinery. The industry has represented to the Centre and hopes that this restriction will be removed. The Centre, on its part, wants the industry to ensure that the original objective of the scheme is not defeated.

Ambika Cotton Mills Ltd of Coimbatore, a known name in the premium segment cotton yarn production and exports, has invested in wind turbines to control its power costs, which have been rising over the years. "We have to save on power costs," says its Managing Director, Mr P. V. Chandran.

The company has 13 MW of installed capacity. It is the need to keep a check on costs that prompted RSM Autokast Ltd, a Coimbatore-based auto component manufacturer, to invest in wind power. The company has 4 MW of installed capacity, including in Chitradurga, Karnataka. The 1.75 MW capacity in Tamil Nadu is used captively.

The power cost is about Rs 2.50 a unit against Rs 4.20 for grid power, according to Mr K. Kasturi Rangaian of RSM Autokast. In Karnataka, the company sells the electricity generated by its turbines to the grid at Rs 3.40 a unit.

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