Suzlon woes 'dragging on REpower'

Indian wind turbine manufacturer Suzlon’s financial difficulties are damaging the prospects of its REpower subsidiary, analyst IHS-EER says in a research note.

“REpower is vital to keeping the Suzlon Group afloat, but Suzlon’s debt position inhibits REpower’s capacity to finance new product developments or provision offshore warranties,” says IHS-EER research director Eduard Sala de Vedruna.

IHS-EER says that REpower delivered over 2.1GW in 2012, accounting for two-thirds of Suzlon’s total installations, including  95% of its deliveries in Europe and 81% in the US.

The analyst points out that REpower has formidable advantages in the key offshore wind space and “owns” the 5-6MW segment.

However, it notes that once RWE’s 295MW Nordsee Ost project and 332MW Innogy Nordsee 1 projects have been built, “REpower’s order book runs dry” as it faces the challenges of policy uncertainty and internal funding constraints.

REpower’s brand license is due to expire at the end of this year, and this will “force Suzlon to clarify the German vendor’s future strategy inside or outside the Suzlon Group to avoid further value destruction,” according to de Vedruna.