Wind Power, Giant Dreams and Cracked Turbines

It’s a beautiful warm spring day and as I sat in my favorite seat by the windows in front of the cafe, I read about an ambitious man in India whose stock is plummeting….despite the fact that his company is the fifth largest supplier of wind turbines in the world. How could somebody not be making a killing, with the surging popularity of wind power?

The story in today’s WSJ by Tom Wright told of the humble beginnings of a brash Indian entrepreneur named Tulsi Tanti. He got his start in the yarn business, and in those days the biggest problem was getting enough electricity to power the factory. A light bulb moment later happened, when Tanti decided to buy windmills to create his own power. Fast forward twenty years, and add in huge tax breaks negotiated with the local government, and the company Suzlon, would become one of the world’s largest makers of large wind power turbines.

But today this energy giant has seen its stock plunge 34% since January, and much of this is due to cracking turbines and angry customers. The firm has been successful selling their 2.5 megawatt wind turbines, with 144-foot blades, to many power utilities around the world, including Edison Mission, of Irvine CA. But the blades have been splitting, and this big quality problem is delaying new wind projects under development. Suzlon blames the unexpectedly violent changes in wind velocity found in the Midwest, but the power companies are threatening to also seek compensation for all of the business they lost while the turbines were down.

Another headache for Tanti’s company is that a big German turbine company they bought a controlling stake in is following German law…and refusing to give the Indians the blueprints for their products unless they buy out all of the other shareholders. That will keep them tied up until 2009 and delay crucial manufacturing improvements using the German technology.

But in the story, Tanti dismisses the problems and continues to radiate the confidence that has made him one of the richest people in India. A Suzlon board member puts it this way….”There’s a risk with Tanti, it’s going to be a huge success–or it’s going to blow up.”