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FEATURES/Big Bet | Apr 25, 2012 | 16036 views

Mytrah's Big Bet On Wind Energy

India has not yet thrown up a wind power utility firm of any scale. Yet serial entrepreneur Ravi Kailas believes he can build 5,000 MW of capacity in five years. Does he know something that others haven't yet figured?
Mytrah's Big Bet On Wind Energy
Image: Jyothy Karat for Forbes India
MILL AROUND Ravi Kailas at Mytrah痴 project at Vajrakarur village in Anantapur distrcit of Andhra Pradesh.The site, which is spread over 90 acres,has a total capacity of 63 MW

E

ver since the first wind turbine was set up in India nearly 20 years ago, no one has looked at wind energy as a serious business. Much of the installed capacity of 15,000 MW in wind was set up to earn tax breaks via an accelerated depreciation scheme offered by the government. As a result, almost 10,000 MW was owned by 1,500 people, translating into an average shareholding of about 7 MW.

That’s the past. Now stack it against what Ravi Kailas plans to achieve at newbie Mytrah Energy: By 2017, Kailas is betting solely on wind energy to make Mytrah the largest independent power producer (IPP) in the country with a total installed capacity of 5,000 MW. So far, there hasn’t been a single IPP of any scale in the country. Even China Light & Power (CLP), the country’s largest IPP today in the wind business, has an installed operational capacity of about 500 MW built over the last five years.

Now, Kailas is a rank outsider to the wind industry. As a serial entrepreneur, he has built and sold companies in telecom, software and real estate. The 45-year-old Stanford MBA has made his money and fame from Zip Global Network, a telecom services company, which he founded and subsequently sold to Tata Teleservices. Over the last 10 years, he has built and sold two other ventures, Xius Technologies and Altius, a telecom software and real estate financial options company.

So in September 2010, when he announced that Caparo Energy (later renamed as Mytrah Energy) would install wind turbines generating 5,000 MW in the country by 2017 and signed agreements of over $2 billion with Suzlon and Gamesa, two of India’s largest wind turbine manufacturing companies, the entire renewable industry sat up and took notice. Every year, India adds something between 2,500 to 3,000 MW of wind mill capacity on the ground. Suzlon, the largest wind turbine manufacturing company in the country, which also sets up wind farms for its customers, adds about 800 to 1,000 MW every year. “It is a huge number…the largest any company has attempted to do ever in the country,” says Ramesh Kymal, managing director of Gamesa India. Just how could a plain rookie aim to set up 1,000 MW every year over the next five years?

Timing it right
In 2008, Kailas was holidaying in Europe, when the itch to find his next business fix hit him. By his own admission, he wanted to do something in the infrastructure space. “But I could not find any area where I could add some value which existing players were already not doing,” he says. And that’s how he stumbled on wind. What he found in the sector was surprising. India’s wind energy potential is about 80,000 MW; 15,000 MW is already installed on the ground. But there was not a single large IPP in the business. “Countries like Spain have several listed wind entities, but in India it is close to nil. Compare this to about 20 listed thermal companies. And in the next 10 years, wind as an industry will add something like 50,000 MW. That’s a mainstream number,” says Kailas.

The entire incentive structure has begun to significantly change in favour of IPPs. Earlier this month, the government scrapped the accelerated depreciation altogether, slashing the rate of depreciation from 80 to 15 percent. Even before that, new generation-based incentives, renewable energy purchase obligations for state utilities under the National Action Plan for Climate Change (NAPCC) and preferential tariff from state utilities for electricity generated from renewable sources had all contributed to an uptick in the generation of wind energy.

With conventional energy sources like thermal and gas becoming more expensive, the state utilities were now willing to make significantly higher tariffs—as much as 40-50 percent more over the last two years in certain states like Delhi and Rajasthan. Since there is no recurring fuel cost, as wind is free, that meant the cost of generating electricity from wind was now at par with a conventional source like coal. “The price at which we are currently producing power at our capital and interest cost is lower than thermal on the margin, which is a phenomenal achievement. This is a unique position for any country to be in,” says Kailas.

For instance, consider Karnataka, where the listed off take price for wind is Rs 3.70 compared to Rs 5 for thermal energy from new coal plants. “There is an incredible, powerful economic construct coming up. So a green energy company that you can build on a utility scale is today actually viable with no subsidies. That is the reason why we believed that wind can be scaled up very, very quickly as opposed to other forms of energy. Today, wind is the cheapest energy in India on the margin,” says Kailas.


This article appeared in the Forbes India magazine issue of 27 April, 2012
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Comments (8)
Dr.a.jagadeesh May 30, 2014
Though I welcome your plan to build 5,000 MW of capacity in five years, Ravi Kailas, here are some innovative approaches for large scale exploitation of both Onshore and Offshore Wind Energy in India:
Action plan to promote Wind Energy in India on a Massive Scale:

For captive consumption of electricity, wind electricity is probably the cheapest option. If one considers medium term horizon, together with benefits of CERs/ RECs, wind energy would turn out to be the cheapest source of captive electricity from the beginning. Total cost of ownership for wind farm is far lower than that of captive plants based on conventional fuels.
Main strengths of wind energy projects are:
• Enormous wind energy potential across the globe,
• Protection against inflation or escalation in electricity
generation cost over the project life,
• Ease of putting up a wind farm,
• Low operations and maintenance requirements,
• Scalability,
• Short gestation period and others.
As on 31 Jan 2014 the installed capacity of various Renewables are:
Wind 20293.83
MW
Small Hydropower
3774.15 MW
Biomass Power
Dr.a.jagadeesh Sep 8, 2013
Good article. I can build 10,000 MW of Wind Power both Onshore and offshore in 8 years if the concept of Wind Co-operatives is allowed by creating a Wind Fund and giving exemption to Investment in Wind Fund for Individual Tax players under Section 80C.
Dr.A.Jagadeesh Nellore(AP),India
Wind Energy Expert
G.b.reddy Jan 1, 2013
Very smart and inspiring move .We need entrepreneurs like Ravi Kailash to redeem India .All the best to him.
Sadat Aug 13, 2012
As long as there are price roofs in the utility sector, growth would be limited.

The Union Government must wake up to the rigour of market pricing.
V V Sanyasi Rao May 7, 2012
Hello Mr Ravi Kailas, I am so delighted to learn your great work on wind energy. Most of your relations starting from Dr Mangaraju Kolluru, Sri Ramesh Gelli, are my good friends and distant relations.

May I have your email Id please. I would like to forward this article to NRIVA, USA an organisation I have been associated as International Director.

Can I forward the article to FAPCCI (The Federation of AP Chambers of Commerce)
Anupam Mathur Apr 27, 2012
Sure, Mytrah can do it..they have access to international finance and can potentially get cheap money. In this industry, cost of interest is a huge component which can make or mar your bottom line. Lap up it's shares in AIM...
Choksi Pankaj Apr 26, 2012
I want Mr.Ravi Kailas to elaborate on how he wants to plan 1000MW/annum? Is he aware of local issues?
Uma Thondepu Apr 25, 2012
I thought that the article is very well written. I am happy there are entrepreneurs like Ravi Kailas in India and may there be many more. Gives me a very positive feeling about India and her growth prospects.
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