ON ACCIDENTAL EMPIRES IN WIND-POWER

SOMETHING IN THE AIR

The Wall Street Journal has a page one story on Tulsi Tanti, who founded a thriving wind-power business in India and turned him and his family into India's recent billionaires.  Mr. Tanti, who hails from the same town I was born in, had a pretty serendipitous journey into this industry over a decade ago, as the Journal story explains:

"Mr. Tanti was born in Rajkot, an industrial town in the northwestern Indian state of Gujarat. After studying commerce and mechanical engineering in the 1970s, he went to work for his family's cold-storage business.

In the early 1980s, Mr. Tanti and his three brothers moved to Surat, a textile center in Gujarat, and set up a company to make polyester yarn for saris and dresses. The company's name, Suzlon, combined the Gujarati word for intelligence and the English word loan.

Suzlon struggled. One big problem, Mr. Tanti says, was electricity. India grants agricultural users in some states subsidized or free power, leaving industrial users to bear some of the world's highest electricity costs. Even so, supply is erratic.

So Mr. Tanti decided to power his factory with windmills. In 1994, he bought two small turbines from Vestas."

The rest as they say, is history:

"By 2005, foreign money was pouring into India's stock market. Suzlon was meeting sales targets and, because of low manufacturing costs, had profit margins of more than 20%, compared with the industry average of 8%.

Later that year, Suzlon raised $340 million in an initial public offering. Citibank sold a majority of its stake in the IPO, and expects to make a $1 billion profit in all from its Suzlon investment.

Mr. Tanti became one of India's richest people overnight. The extended Tanti family owns about 66% of the company, worth about $11 billion at the stock's height earlier this year and more than $7 billion currently. Mr. Tanti owns about 16% of Suzlon, according to the Mumbai Stock Exchange."

The Journal piece has some interactive charts that show the global wind-power business in perspective. Particularly interesting is that "wind represented over 30% of the electricity generating capacity added in the U.S. in 2007, compared to less than 1% in 2002.  Yet wind-power accounted for only 0.4% of the power generated".

Looks like there may be some opportunities for some more home-grown fortunes in wind-power to come in the US alone.

Comments

[Alex Tolley]

Wind power has an uphill struggle in the developed nations because of "low cost" existing power infrastructure. Tanti was essentially not having to compete against entrenched industry and competitive offerings.

having said that, the US should be developing alternative energy systems, wind, solar, geothermal and wave power. There is a lot of scope in these areas, especially once the true cost of fossil fuel combustion becomes transparent.