MARKETING STRATEGY FOR SMALL WIND TURBINES IN INDIA - AN ASSESSMENT Prof.A.Jayakumar Ph.D, R.Arumugam, B.E., M.B.A.

Director MBA, PGP College of Engineering & Technology, Namakkal Senior Manager(Windfarm), Tamil Nadu Newsprint and Papers Ltd., Kagithapuram

Abstract: Indian Wind industry has attained a steady growth and has attained a position as fifth largest in terms of installed capacity. Many MNCs have made India as a production hub for their Asian market. Financial support like preferential tariff, long term PPA, Generation based incentive, Accelerated depreciation are motivating the growth. In pursuit of western technological advances, Small Wind Turbines (SWT) are also entering into the Indian market very recently. The perennial shortage of power, availability of space, lack of grid distribution lines makes the rural area more ideal place for installation of Small Wind Turbines than urban areas. However, the difference in the adaptation of technologies like size, grid connectivity, solar-hybrid, mounting arrangement etc. will have a definite bearing both on the marketability of the system and impact over the rural economic activity. This study focuses on the different technological approaches in marketing the SWTs and tries to evaluate the amount of thrust to be given for the different options in the Indian context. As Tamil Nadu has 45% share in the installed capacity of large wind turbines, a study of the above subject pertaining to Tamilnadu will more or less reflect the Indian scenario. The study will throw light on the weightage of the different paths to be chosen in the promotion of SWTs in India. The analysis of different technological adaptation will try to give inputs for the strategy to be adopted in marketing SWTs.

Wind Energy - Largest Renewable Energy Source in the World Word turned to Renewable Energy when it was shaken by the Oil Shock and the rise of the necessity to counter Climate Change. A number of renewable energy concepts like Wind, Solar, Biomass, Geothermal are being supported and developed by Governments. Among them, the wind energy market has witnessed enormous growth in the past; the world's cumulative installed capacity reached 197,712 Megawatts (MW) in 2010, from 24,052 MW in 2001, at a Compound Annual Growth Rate of 26.4%. The exponential growth of the wind energy market is fueled by the depleting reserves of fossil fuels, declining cost of wind power generation and a growing sensitivity for the environment. From being an emerging fuel source twenty years ago, wind energy has transformed into a commercial generating technology in over 70 countries, with more effective and more reliable equipment and machinery. The global wind energy annual installation has increased at a CAGR of 21.3% from 6,652 MW in 2001 to 37,698 MW in 2010. Wind power will soon become an important player in the global energy market, with the growing equipment market creating a large number of jobs. Indian Wind Power: a Success Story Wind energy has been the flag bearer for the Indian renewable energy (RE) industry for quite some time now. Investments in RE in India have increased from a meagre USD 94.58 million in 2001 to USD 3.7 billion in 2008 and about USD 5 billion by 2010 - at a phenomenal compound annual

growth rate (CAGR) of 56 per cent. A significant part of these investments (USD 3.2 billion) were in wind energy. The development of wind power in India began in the 1990s, and has progressed steadily in the last few years. The short gestation periods for installing wind turbines, the increasing reliability and performance of wind energy machines have made wind power a favoured choice for capacity addition in India. Currently, India has the fifth largest installed wind power capacity in the world with a cumulative installed capacity of 14,158 MW till the end of March 2011. Starting from about 1,350 MW in 2001, this figure has been achieved at a CAGR of 26 per cent for the period 2001-11.
CAGR refers to compound average annual growth rate, using the formula: CAGR = (End Year Value Start Year Value)^ (1/steps) 1.

In addition to the progress made in wind turbine installed capacities, the progress of the overall wind energy ecosystem in India has been encouraging as well. A pointer to this is the increasing number of global wind turbine manufacturers setting up base in India. Indian policies have encouraged local wind turbine manufacturing by tuning the customs and excise duties such that they favour importing components over importing complete machines. India also has a national certification programme for testing and certifying wind turbines, under Ministry of New and Renewable Energy (MNRE), again intended to boost local economy. While the growth of wind power in India was largely driven by tax incentives until recently (through the accelerated depreciation scheme), more independent power producers (IPPs) have got interested in investing in this segment with the announcement of generation based incentives (GBIs) in 2009. In fact, since 2010, and especially in 2011, there has been a flurry of announcements from the Indian corporate sector on their mega plans for large capacity wind farms. The total potential for wind power in India was first estimated by the Centre for Wind Energy Technology (C-WET) at 45 GW, and was recently increased to 48.5 GW. This figure was also adopted by the government as the official estimate. At heights of 55-65 m, the Indian Wind Turbine Manufacturers Association (IWTMA) estimated that the potential for wind development in India is around 65-70 GW.

Small Wind Turbine:

What is Small Wind Turbine?: Similar to their bigger counterpart, a small wind turbine produces clean and emission-free electricity from wind by rotating its blades (or other airfoil design) by the moving air. The capacity of the turbine is so small that the generated energy can be used to power a home, farm, school, or small business unlike the large turbines which can supply power to Utility grid. Most small wind turbines look like a miniaturized version of the large, utility-scale, three-bladed turbines. By convention, any Wind Turbine which

produces lesser than 100 Kw can be classified as Small Wind Turbine (SWT). The SWT industry encompasses over 200 different models and they can vary widely in appearance. A small wind turbine is technologically advanced but mechanically simple, with only two or three moving parts. Most feature three blades of 2-15 feet in length, a generator located at the hub, and a tail. The turbine is mounted on a steel tower 35-140 feet high, which is designed as a freestanding monopole (like a street light), a lattice tower (like a radio tower), or a guyed monopole (like a street light with support cables from mid-tower to the ground). These types are called Horizontal Axis Wind Turbines (HAWT). Some models eliminate the traditional propeller-shaped blade design and instead feature a cylinder-like component that revolves in a vertical axis, and are known as Vertical Axis Wind Turbines because the plane of the turbines rotation is perpendicular, or vertical, to the ground. The technology has advanced considerably in the recent years, making small wind turbines quieter, more reliable, and better able to blend in with surrounding aesthetics. By definition as per IEC-61400-2, Small Wind Turbine is defined as a wind turbine with a rotor swept area smaller than 200 square metre generating at a voltage below 1000 VAC or 1500 VDC. Technology variations: Apart from the classification as Horizontal Axis Wind Turbine (HAWT)
and Vertical Axis Wind Turbine (VAWT), SWT can be classified according to their deployement as ON-GRID or OFF-GRID / Stand-alone system. In an OFF-GRID Mode, Small Wind Turbines charges the batteries for backup power for remote, stand-alone applications. In an ON-GRID Mode, Small Wind Turbines connect to the utility grid. Connecting to the electric grid allows a turbine owner to use electricity from the local utility when the wind does not blow, but also allows any surplus electricity - energy produced in excess of consumption, such as when winds are strong and usage is low - to be sent back into the grid and used by a neighbour. But unlike large turbines that power entire cities, small wind systems are used to produce power primarily on-site for a single user. In a Wind Solar Hybrid System, a home is served simultaneously by the wind turbine and an array of solar photovoltaic panels. If the wind speeds has reduced considerably to the level with which the wind turbine is not able to operate (depending on the capacity of the turbine) there will be low output from the turbine. There will be batteries which stores the electricity whenever it is produced like from solar energy in the day time and through the turbine whenever wind speed is good. Applications: Tens of thousands of homes, farms, small businesses, schools, and other institutions in US and Europe use small wind turbines to lower or eliminate their electricity bills. The major

application areas are Electrification of Houses / Farm-Houses, Rural Electrification, Electrification of the equipments for Agricultural and Irrigation Activities, Educational Institutions in Rural / Urban areas, Cellular / Telecom Towers, Battery Charging of Plug-In Hybrid Vehicles. Homes in US use approximately 9,400 kilowatt-hours (kwh) of electricity per year (about 780 kwh per month). Depending upon the average wind speed in the area, a wind turbine range of 1 to 5 Kilowatts would be required to make a significant contribution to meet this demand. A typical residential wind energy system might be 1-10 kW in capacity, measuring perhaps 10-25 feet in diameter, mounted on an 80-foot tower. Such a system can meet the electricity needs of a household, farm, or small business. Turbines as small as 400 watts, with rotors only 46 inches in diameter, may be employed for specific purposes such as pumping water (for stock or irrigation) or running lights and appliances in a home, recreational vehicle, or even a boat. Small wind turbines may be set up as stand-alone systems, used to complement a solar photovoltaic (PV) systems, or be interconnected with the utility grid. Cost: The cost of installing a typical 1 kW wind-solar hybrid system is around Rs 1.9 to 2.1 lakhs where, 600 W is the wind and 400 W is the solar component. with controller is around Rs 1.00 lakh per kW. The cost of installing a small wind turbine

Benefits: Even the smallest of wind turbines can produce several hundred kWh a year, equivalent to 5%-20% of an average home's annual needs in the developed world. In the right location, a larger 20 metre tall free-standing turbine can generate tens of thousands of kWh a year, producing the vast majority of the power a building uses.
The wind turbine typically lowers the electricity bill by 50 to 90% for six/ten months of the years. The amount of the money a small wind turbine saves in the long run will depend upon its cost, the amount of electricity usage, the average wind speed at the installed site and other factors. Depending on these factors, the payback period can be as low as six years. Small wind energy turbines may be installed as stand-alone systems, or they may be connected to the utility grid. Connecting to the grid requires the approval of the utility. Technical and insurance requirements for interconnection vary, as do metering arrangements. Connecting the system to the utility grid allows one to sell excess power that is generatee to the utility, as well as to buy electricity from the utility when the needs exceed the wind-powered generation. Interconnected systems do not require batteries. If the Utility offers a net metering or billing arrangement, the excess power can be sold at the same

price one pays for the electricity they purchase, thereby increasing the value of wind energy system investment and shortening the payback period. Thus the personal benefits of owners of a small wind turbine can be, Decades of free electricity after initial-cost recovery Increased property values Reliable electricity Relief from high and volatile prices of other forms of electricity Personal energy independence Ability to support clean energy and fight global warming in a tangible way There are public benefits also from the small wind turbine in the economical, social and environmental aspects. Though the power generated by small wind systems is used only by a single residence or facility, the benefits of wind power extend to the entire community. Community benefits include: Economy: Higher property values Diversified state energy supply portfolio Increased in-state electricity generation Increased market competition from more consumer choice Local jobs for turbine sales, installation, and maintenance Security: Emergency back-up power to police stations, hospitals, etc. Increased local energy independence Enhanced reliability and power quality of the electricity grid Utility peak-power relief Environment: 1 residential-scale turbine = displaces emissions of 1.5 cars No emissions, water use, or hazardous waste Small wind turbines are now more reliable, quieter and safer than those introduced in past decades. Anybody who wishes to contribute to the environment by producing his/her own electricity Residential wind turbines have been installed in almost all cities in India and are known to work successfully. Wind turbine produce no pollution and using wind power you will be offsetting pollution that would have been generated by your electricity supplying company. Over its life, a small residential wind turbine can offset approximately a minimum of 1.2 tons of air pollutants and 200 tons of greenhouse gases (carbon dioxide and other gases which cause climate damages). Small wind turbines do make some noise, but not enough to be found objectionable by most people. A typical residential wind system makes less noise than the average washing machine. Wind turbines do not interfere with TV reception.

Most small turbine has very few moving parts and do not require any regular maintenance. They are designed for a long life (up to 20 years) and operate completely automatically excepting the batteries which need to be changed between 3 to 5 years depending on the manufacturer. Difference between small wind turbine and big wind turbine: The power generated by the large size wind turbines will be upto Utility-Scale and sometimes can replace the conventional power. Here the power is produced by wind turbines having a capacity ranging from 250 2,000 kW. In India though the upper limit goes upto 2100 Kw which is commercially available now. They are installed as wind farms having a total capacity ranging from 10 300 MW operated and maintained by professional maintenance crews. These turbines require at least 6 meters/second average wind speed for their optimum production. Government of India and State Governments have implemented a number of benefits for the industry. In contrast, the rating of SWT ranges from 300 W to 100 Kw the optimum size being 10 Kw. Unlike their bigger counterparts, they are installed in individual homes, farms, business, schools etc. They operate at an average wind speed of 4 m/s. There are both on-grid and off-grid version. Professional maintenance crews are not required for its operation or maintenance. Market: The small wind power's share in the total global wind power in the year 2010 is around 0.14%. With the increasing government incentives in various countries and increasing end user awareness, the share of small wind power is expected to increase to 0.48% by the year 2020. There are significant developments in small wind turbine market in developed and developing countries. The UK has witnessed a Compounded Annual Growth Rate (CAGR) of over 65.3% during the period 2006-2010 and China has witnessed a CAGR of 29.8% during the period 2006-2010. The global small (less than 100kW) wind turbine market has increased from 105.9 MW in 2006 to 275.8 MW in 2010 at a CAGR of 27.0%. Small wind turbines are used for battery charging, residential purposes, irrigational purposes and small industrial and commercial purposes. The global small wind turbine market is expected to increase from 275.8 MW in 2010 to 3,726.5 MW by 2020 at a CAGR of 29.7%. The small wind market is mainly present in few countries and around 68% of the total small wind installed capacity is installed in three countries namely the US, the UK and

Canada. All the top-tier small wind turbine manufacturers are also concentrated in the three countries.
Status of SWT development in India: The SWT market is at its nascent stage in India. About 10 Nos of SWT manufactures are in the market. Most of them have based their manufacturing unit at Pune, Maharashtra. There are no

competitors from abroad so far. MNRE has recently announced promotional schemes for this sector. A few prototype models are under testing at Centre for Wind Energy Technology. Though water pumping wind mill have arrived as early as 1980s, only a few Aerogenerators could be seen erected. At present, the cost of the units is prohibitively high for a home user and a great barrier in making purchase decision. The potential for SWT market in India is 1000 MW of installed capacity as on 2010 assuming 1 million potential homes to install small wind turbines (http://www.greenwindenergy.net/marketpotential.html) Small Wind Turbine Manufacturers in India are listed below: o UD Energy Systems Private Limited o Unitron Energy Systems Pvt Ltd o Pioneer Wincon Pvt Ltd o Novergy Energy Solutions Pvt.Ltd o Machinocraft o Chandra Gears Pvt. Ltd o Chloride International Ltd. o Jothi Energy Associates o Pawanmitra Aero Energies o Shamavi Enterprises o Sidilu Renewable Energy o Supernova Technologies Pvt. Ltd. o Vaigunth Ener Tek (P) Ltd. o Wintec Energy India Private Limited Governmental support: Ministry of New and Renewable Energy, Government of India has announced policy and financial support in the form of Modified scheme for the programme on Small Wind Energy and Hybrid Systems(SWES) during 2010-11 and 2011-12. The objective of the programme on Small Wind Energy and Hybrid Systems is to develop technology and promote applications of water pumping windmills and aerogenerators/wind-solar hybrid systems and the programme envisages financial support for setting up water pumping wind mills and aerogenerators / wind solar hybrid systems, their field trials & performance evaluation, putting up Grid connected SWES on demonstration basis and Research & Development. Various activities of programme on Small Wind Energy and Hybrid Systems will be implemented in association with the State Nodal Agencies (SNAs), manufacturers of SWESs, R&D/ academic/

autonomous institutions, NGOs, Govt. undertakings, and user organizations. The programme on wind solar hybrid systems is also aimed to be implemented in market mode through active involvement of manufacturers of SWESs. The annual targets of the programme for the years 2010-11 and 2011-12 have been fixed as 25 Nos. Water Pumping windmills, upto 500 Kw capacity Aerogenerator/wind-solar hybrid. The Budget Estimate is Rs. 5.00 crores. The pattern of Central Financial Assistance (CFA) for Water Pumping Windmills (Wind Pumps) will be the MNRE meeting up to 50% of the ex-works cost of water pumping windmills, except for unelectrified islands & North eastern States including Sikkim for which up to 90% of the ex-works cost, subject to the following upper ceilings for each approved design of the windmill (wind pump): 1. Water pumping windmills MNRE will provide support for Direct drive gear-less windmills such as Modified 12 PU 500 and similar other Windmills @ Rs.20,000/- Rs.30,000/-, for Gear type windmill @ Rs.30,000/Rs.50,000/-, for AV55 Auroville type windmill @ Rs.45,000/- Rs.80,000/-. The Ministry will determine the CFA for other designs of water pumping windmills at the time of evaluation of the performance of the new model/design. The MNRE will provide administrative charges of 2,500 per windmill (wind pump) to the state agency. 2. Aerogenerators / Wind-Solar Hybrid Systems MNRE support for aerogenerators / wind solar hybrid systems will be provided on per kW basis. The support will be provided on the basis of type of users. For Govt./Public/Charitable, R&D, academic and other non-profit making institutions the support will be Rs 1.50 Lakh per kW. For other beneficiaries not covered above (Individuals and private/ corporate sector will come under this category) the support will be Rs 1.00 Lakh per kW. The remaining cost of the system and all other expenditure related to packing & forwarding, transportation, installation and commissioning of the system will be a part of the system and will be met by the beneficiary of the system. In case of installation of systems to be done through State Nodal Agencies, an administrative charge @ 2% of CFA will be provided to SNAs at the time of final release. MNRE through its Centre for Wind Energy Technology is carrying out testing of Small Wind Turbines. CWET is presently in the process of type testing seven Small Wind Turbines (SWT) of ratings 1.4 kW, 3.2 kW, 3.5 kW, 4.2 kW, 5 kW and 5.1 kW at the Wind Turbine Research Station (WTRS), Kayathar as per the requirements of IEC-61400-2 together with IEC 61400-12-1. The measurements are underway and is likely to be completed during the current windy season (April Sep.2011).

US & European Experience: SWTs have developed into a matured market in US and Europe. The study of the experiences of the US and Europe market for SWTs will be of great use in charting out the course of development for the Indian market. Policy Support: United States: In United States, support for SWT manufacturers is from two fronts, Federal and States, though they differ from State to State. The following supports are provided in US: 1. Rebates or other up-front incentives to consumers: Helping people afford small wind systems 2. Streamlining the permitting process: Making an installation safe, easy, and affordable 3. Enactment of distributed generation feed-in tariffs (buy-back rates): Setting a price at which utilities compensate small-turbine owners (and other producers of on-site renewable energy) for any excess electricity they generate 4. Initiating public education and outreach programs: Letting people know that small wind is an option 5. Installing small wind turbines on government property: Public facilities supporting the public benefits of renewable energy 6. Implementing annualized net metering: Consumers receiving fair credit from a utility for any electricity produced but not consumed 7. Standardizing grid interconnection rules: Making the process of connecting a turbine to the electric grid more transparent, predictable, and streamlined 8. Enactment of state renewable electricity standards: Requiring power companies to derive a certain amount of their generation from renewable energy 9. Property or sales tax reductions/exemptions: Reducing the payback period of a turbine investment 10.Low-cost loans to consumers: Providing low-cost financing for renewable energy equipment 11.Supporting utility green pricing programs: Utility customers supporting renewable energy by agreeing to pay a slight premium on their energy bills 12.Supporting turbine testing and certification: Helping the industry help itself 13.Ensuring policy treatment is equitable across all small renewable technologies: Letting the market decide 14.Loan for wind-measuring equipment to potential consumers: Helping consumers get the most out of their investment While the federal 30% investment tax credit remained an important financial incentive, the U.S. Department of Agricultures Rural Energy for America Program (REAP) and U.S. Treasury 1603 payments supported 250 small wind installations in 30 states. State distributed energy incentives remained a major driver, especially in California, New Jersey, New York and Ohio. More than 30 states offered small wind incentives (including American Recovery & Reinvestment Act funds).

In the year 2010, US has developed the Small Wind Certification Council, the North American Board of Certified Energy Practitioners program for small wind installers, four regional small wind test centers and the Distributed Wind Energy Association. These are claimed as maturing factors for the industry. Europe: In Europe, the European Commission funds the Small Wind Industry Strategy (SWIS) with the intention of stimulating growth in the small wind turbine industry. The SWIS provides technical, market and contact information, as well as a FAQs section designed to inform newcomers about the current status and future direction of the industry. It also sets out to establish why the small wind industry is slow to reach its full and considerable true potential, to understand barriers in the fields of know-how and marketing, and to propose actions to boost the industry. Its aims include detailed analysis of the small wind turbine (SWT) industry, through an exhaustive review of existing European SWT actors. The project team including SEED (Socit d'tudes Et de Dveloppement), trade group EWEA, and industry representatives such as Vergnet, is compiling details of successful SWT installations to date, and surveying national markets. The project will include market analysis covering markets in Europe and further afield. It will formulate recommendations for their development and prepare user guides for identified market segments. Key project objectives of the organisation are to: provide a comprehensive manual covering all aspects of the small wind industry field, inform policy makers, industry specialists and the wider public, promote wind energy as a market showing vigorous growth, inform the general public of the reality of wind energy as a mature and beneficial technology and, crucially, initiate a regularly updated internet-based information source. Benefits Achieved: The benefits of small wind deployments for the economy can be measured in several ways. The most obvious are potential domestic jobs linked to the manufacturing, installing and selling of small wind turbines. The higher the domestic content, the greater number of jobs created in the U.S. Other key economic metrics are operations and maintenance (O&M) expenditures. Finally, exports to overseas markets also contribute to economic activity associated with the small wind turbine industry. Small wind also creates jobs in the areas of tower manufacturing, transportation, installation and education. Installation materials, services and labor account for about 30% of total costs these are local jobs at local small businesses. And with the increased demand for installation comes an increased demand for training, resulting in more education-related jobs. The 2010 U.S. small wind industry represents an estimated 1,500 full-time equivalent jobs in manufacturing, installation,

maintenance and sales.

Based on reports of direct employees, vendors and dealers by leading

manufacturers, this workforce estimate indicates that 50 full-time jobs are created per megawatt of installed U.S. small wind capacity and 30 jobs are created per megawatt of exports by U.S. small wind manufacturers. As per AWEA, small wind produces more jobs per unit of installed capacity than any other power generation resource. O&M costs for small wind typically vary, with the size of the turbine. The O&M costs on an annual basis, with the highest estimates for 100-kW turbines: $2,500 annually (with remote sites in Alaska as high as $3,500 annually). On the lower end, $200 to $700 per year is expected for residential-scale turbines. From an environmental perspective, the 179 MW of small wind installations displace 161,000 metric tons of CO2 annually, the equivalent of removing 28,000 cars from the highways Europe: Europe is wind-rich. The UK has more than 40% of Europe's wind resources and is ideally placed to capture this energy with the latest generation of small wind turbines. It is claimed that, when installed in the right location, small wind can give the highest return on investment of all the renewable energy technologies with a payback period of just three to five years being achieved under the government's new feed-in tariffs scheme. Small wind suppliers have been quick to capitalise on the UK government's feed-in tarrif, introduced in April 2010. The levels of generation tariffs vary based on the size of technology installed, so a 1.2 kW micro wind turbine will be paid just over 34p/kWh($0.5/kWh) while a 6 kW turbine will receive slightly less. As another example, the owner of a 10 kW turbine would earn 26.7 p/kWh, regardless of whether the energy is used by the owner or exported onto the grid. Energy exported to the grid attracts a further payment of at least 3p/kWh. Also, energy used on-site offsets the energy bill and is typically worth another 12p/kWh. Overall, a 10 kW turbine owner with a strong wind resource could reap up to an extra 14,000 ($21,000) per turbine per year. In England, Scotland and Wales, all the owner has to do is select an approved technology, such as a wind turbine that has qualified for the Microgeneration Certification Scheme (MCS), and install it using an MCS-accredited installer.

Market Growth:
According to AWEA, the 2010 U.S. market for small wind turbines was both impressive and changing. More than 25 megawatts (MW) were installed, representing a 26% growth from 2009 and an almost eight-fold increase in annual installation capacity and more than twelve-fold increase in annual revenues compared to just 5 years ago. The cumulative installed small turbine capacity increased to 179 MW (deploying 144,000 turbines). Twenty-two manufacturers with a U.S. presence reported sales of 51 turbine models. There was a significant shift away from micro and off-grid systems to larger, grid-connected units, continuing a 5-year trend (nine of 10 leading wind turbine models sold in the U.S. were grid-tied). While domestic sales by U.S. manufacturers accounted for an 83% share of the U.S. market, 27% of U.S. manufacturers output went to foreign markets. Manufacturers attribute this growth to a mixture of new and improved federal and state incentives, optimistic private equity investors, and sustained consumer demand. An example is the 2009 American Recovery and Reinvestment Act, which expanded the federal investment tax credit (ITC) for small wind turbines, allowing consumers to take fully 30% of the total cost of a small wind system as a tax credit. Furthermore, in the same year another $80 million of private equity was invested in manufacturing during the peak of the economic recession, boosting to at least $252.7 million the total equity invested across 20 manufacturers over the past five years. This provided companies with capital to increase production, lower costs, meet sustained demand, and even acquire competitors. Under a programme called Wind for Schools, to date nearly 30 MW of distributed wind turbines have been installed at more than 250 K-12 schools ( Schools which combine primary and secondary education), universities and other educational facilities. Over the next decade, it is estimated that these 11 state Wind for Schools programs will directly engage 700 to 1,000 engineers and more than 10,000 rural K-12 students in wind energy. These numbers could triple if the program expands to 30 states, but funding for WAC operations is highly uncertain as of the writing of this report. Wind turbines to offset electrical loads for small business, commercial enterprises and hospitals experienced growth as well (turbines larger than 5 kW). The farm market, long considered a potentially large wind opportunity, experienced modest growth, especially in the wind-rich Midwest, primarily deploying 50-kW to 100-kW turbines to offset large electrical loads associated with animal confinement operations, grain processing and dairies. Although utilities are making significant investments in large-scale wind projects, there have been very few direct sales of small turbines to utilities (Alaska is an exception).

Export Markets

Small wind turbine exports were a bright spot in 2010 that somewhat offset the soft North American market conditions. Two distinct but strong overseas markets dominated offshore sales for North American manufacturers: Europes feed-in tariff markets and telecommunications. Feed-in-tariffs in the U.K. and Italy and emerging favorable enabling policies in Denmark, France, Spain and Portugal have spurred exports of the entire small wind product spectrum. The telecom markets in Asia and Africa are booming and experiencing an excellent uptake of U.S. small wind products in sizes smaller than 20 kW. A third emerging market is the international village diesel retrofit market, especially in the growing economies of China, India and Russia.

Costs: Although the costs associated with small wind installations have come down, in the main, wind turbine prices vary widely due to the numerous factors. AWEA has conducted a survey in the US which indicates costs, generally, tend to gravitate between $3 - 6/W, and $0.15 - 0.20/kWh for a wellsited turbine. Costs and cost recoupment periods can vary due to a range of factors. They include the availability and quality of state incentives and state/utility net metering (Net metering is an electricity policy for consumers who own (generally small) renewable energy facilities (such as wind, solar power or home fuel cells) or V2G electric vehicles. "Net", in this context, is used in the sense of meaning "what remains after deductions" in this case, the deduction of any energy outflows from metered energy inflows. Under net metering, a system owner receives retail credit for at least a portion of the electricity they generate.) policies, average wind speeds, and prevailing costs. Installations tend to be most cost-effective in regions where the cost of utility provided electricity exceeds $0.10/kWh. Cost of equipment, installation, and maintenance, estimated operations and maintenance (O&M costs are roughly 1% of the retail cost of an installation, accrued annually) sales and property tax rates and incentives, raw manufacturing materials, insurance, method of financing, permitting costs, and the type of application also play a role in determining expense. Installations for businesses may benefit from special tax incentives.

Challenges & Forecast

As per AWEA, U.S. SWT industry is experiencing some challenges viz. state incentive programs have (temporarily) stalled, the 2012 REAP funding is in jeopardy, and the U.S. Fish & Wildlife Service is proposing guidelines that are inappropriate and cost prohibitive. Planning and zoning remain a serious barrier in many jurisdictions. Untested, poor quality imports have also created negative impacts on the industry and affected the products credibility with public officials and the public. On the bright side, the export feed-in-tariff markets and power for telecommunications are somewhat offsetting the soft domestic market situation. Municipalities in US also exhibited increased volume, using favorable financing terms and incentives available to public entities (although they are precluded from some federal incentive programs). Powering water treatment facilities is an example of an emerging municipal application. A special municipal projects case is village power systems; while prevalent in the developing world, winddiesel systems are also important in Alaska, where volatility in diesel prices threatens the economic viability of isolated Native communities. This application has enormous overseas potential, provided the business model for product and service delivery can be sustainably implemented. The suburban and rural distribution utilities have traditionally received their electricity from centralized facilities and usually have an ownership relationship to same. This relationship has created an institutional barrier to local ownership of small, distributed generation. A seriously underdeveloped market with significant potential for small wind is on-site military installations. The U.S. military is the largest electricity user in the world, and it has some fairly aggressive renewable energy goals. Mission compatibility, siting, competitive economics and other priorities are barriers that must be overcome to fully capture this opportunity. The industry has mixed perspectives on the 2011 small wind climate. Clearly the residential market is softer than the 2010 market because of the uncertain economy and the current public loss of focus on energy and the environment. The temporary curtailment and re-development of some key state incentive programs also hurt 2011 sales. Some manufacturers are reporting flat sales in 2011, while others are forecasting reduced domestic sales. Some state programs remain strong, and overseas sales, as mentioned earlier, are helping the overall 2011 picture. The agricultural sector market is growing, partly due to strong commodity prices and resulting income that farmers are investing into on-farm capital items. Currently, some 250 companies in 26 countries manufacture, or plan to manufacture, small wind turbines, according to latest figures released by the American Wind Energy Association (AWEA). Of

these companies, 95 (or 36%) are based in the US, though in the main they have fewer than 100 employees. According to AWEA's 2010 Review, the number of identified manufacturers in the US increased from 66 in 2009, which, given the country was then gripped in recession, was an impressive performance, although the vast majority are in start-up phases and roughly half the world market share is held by fewer than 10 US manufacturers. Moreover, manufacturers reported to the AWEA that while interest in small wind has increased throughout the economic recession, consumers are delaying purchasing decisions until financing becomes more available and affordable. Many manufacturers are therefore expecting a surge in sales to follow when confidence returns and the economy is more stable. In common with their bigger counterparts, small wind's technology has advanced considerably in recent years. These have propelled small wind energy systems to a position of pre-eminence in renewables tables. They are one of the fastest growing forms of customer-sited or 'distributed' generation and one of the best energy investments for small businesses and homeowners. The world's leading 15 manufacturers continue to predict exponential sales growth in the US market over the next five years, with projections of over 1000 MW of cumulative installed small wind capacity in America by 2015, despite current economic conditions and cautious sales in 2009. AWEA says that although manufacturers pared down their growth projections from 2009's review, they remain optimistic about achieving their target. Primary drivers include the eight-year 30% federal investment tax credit enacted in October 2008, private equity investments, and greater equipment supply and manufacturing capabilities across the board. Summary of the experiences: Without a strong government support through policies both regulatory and support , it would not have been possible for such a matured market in US & Europe Development of Net metering concept in US and Feed-in-Tariff in Europe for SWTs are the major Key drivers Marketing strategies: Marketing and marketing strategy: Management science defines the marketing mix as the blend of the four controllable variables that make up the nucleus of the marketing program product, pricing, promotion and channel. In addition, there are non-controllable environmental factors which each business must have an operating plan for dealing with. Non-controllable factors include technology, competition, laws, social structure, cultural norms, economic conditions and political considerations.

Strategies and tactics are the two elements of the marketing program that reflect the various techniques used to enhance the effectiveness of the marketing mix. A strategy is a set of broad directional, action decisions required to achieve a predetermined objective. Marketing Strategy assumes so much importance in that it decides the Corporate Strategy of the company. The following section discusses the strategies that can be adopted by the SWT manufacturers for promotion of their product in Indian context with reference to the marketing mix. Pricing Strategy: Most important task of the marketing mix is pricing because pricing is the economic consideration for which management must balance the products costs with the requirements of the marketplace. It requires the decision maker to make judgments concerning consumer income, business conditions, competitive reaction, corporate goals and costs of production and distribution. Marketing managers have to be able to do three things: (1) estimate the products value to particular market segments and produce a product in line with this estimate (2) convince the consuming public that the product price is fair and the best value for the dollar and (3) develop pricing policies and strategies that will generate sufficient revenues in the long run to satisfy investors and assure survival Factors to be considered in making pricing decisions (1) nature and extent of consumer demand (2) the short and long run costs of manufacturing and selling the product (3) the competitive reactions (4) the antitrust laws (5) the promotional strategy (6) the channels of distribution (7) profit goals and (8) life cycle of the product. The other Key factors which are to be considered are (1) Market structure (2) Market conditions (3) Competitive Behaviour (4) Product (5) customers (6) Goals or Objective of seller. All products have a life cycle (1) introductory stage (2) growth stage (3) maturity stage (4) saturation stage (5) decline. Obviously, the SWT is in the introductory stage in India and as such there is no biggest competitor from abroad though there is a mature market. Hence the pricing formula adopted can be market or demand based as of now. In case of variations in market conditions the pricing can be modified accordingly considering all the above factors. Product strategies: Product is viewed as a reservoir of satisfactions that accrue to its owner either from possession or use. These satisfactions are often more than functional and fulfill other needs such as aesthetic gratification, convenience, social status, psychological well being and so forth. A policy of product differentiation involves modifying particular product attributes with the goal of tapping a new market segment or enlarging demand in a current segment. At present the SWT

manufacturers can offer four types of products (1) Wind Pumps (2) Wind turbines grid connected (3) Wind turbines stand alone and (4) Wind Solar Hybrid. As per the available literature in their websites the rating of the wind turbines varies over a wide range. However, it is observed that the capacities are not standardized making it difficult to compare prices and performance of them by the prospective consumers. The standardization of capacity of SWT requires intervention from Governmental and Research institutions the process of which, it is understood, is underway. The other segment like Wind-Diesel hybrid systems is not becoming popular because of its use of fossil fuel. However they can also be considered in places where the availability of solar potential is low like north eastern states and availability of grid power is very scarce. Market segmentation recognizes the fact that markets are not homogeneous. The market segments as experienced in US and European markets can be listed as below: Electrification of single family Houses Electrification of Farm-Houses Business / Industrial Sites Educational Institutions in Rural / Urban areas Schools Government Buildings Cellular / Telecom Towers / Communications Systems Rural Electrification Electrification of the equipments for Agricultural and Irrigation Activities Battery Charging of Plug In Hybrid Vehicles Military

The trend that has emerged from the global economic downturn, is that start-up manufacturers have narrowed their product lines while making their products more adaptable to a wider range of different markets - by enabling them to service both on- and off-grid applications, for example. In the US, at least, few leading manufacturers now offer more than three or four models and instead focus on catering to narrower market niches.

The four types of products and the exhaustive market segments mentioned above may demand a multiplicity of variations in capacities, type, and technology in products.

Product positioning strategy refers to the manner in which the product is targeted at specific consumer segments either through the intrinsic attributes of the product or through the image created for the product through promotion. Benefit segmentation involves identifying a particular market segment which is highly sensitive to the presence of one or more key product attributes. Apart from the economics of a SWT, the environmental attributes of the generated energy can be this key attribute for promoting within Business / Industrial Sites, Educational Institutions & Schools. One more attribute which will be attractive for educational institutions and schools is its innovative technology which when offered through a solar-hybrid system will enhance the attractiveness. Community ownership: In the wind industry, one business model is called community wind, which is similar to the third-party ownership model. Community wind refers to wind generation assets that are owned by a group of local people usually farmers and business people, and sometimes the municipality who create a Limited Liability Corporation (LLC) that then enters into a power purchase agreement (PPA) with the local utility to sell the power. Common in parts of Europe, community wind is emerging in rural, windy areas of the United States as a vehicle for economic development, especially in Minnesota and Iowa. It should be noted that a significant number of community wind projects, to date, have deployed utility-scale wind turbines, as opposed to small wind turbines, due to existing net metering caps in the U.S. Midwest. In India also there is a great opportunity for this type of model. The services of Self-Help groups could also be used in this direction in organizing such community ownership in rural areas. Strategy in Channels of Distribution: A channel of distribution is the route that the product follows in its passage from the producer to the consumer. Critical factors affecting this route are: (1) nature of the good (industrial, perishability, bulk) (2) nature and location of the markets (3) price of the product (4) availability of middlemen, transportation and storage facilities (5) sales effort required by middlemen and (6) resources of the manufacturer. Channel management: Selection of proper channel is a very critical factor in the marketing strategy of small wind turbines. In US, the preferred business model for residential sales is through local dealers and developers, although marketing and sales through big-box retailers were added to the mix in 2010. A number of

business models were employed to serve the non-residential, small wind markets. Whether a turbine was sold outright to the host as a net-metered application, leased with a buy-back arrangement or developed via an inside the fence power purchase agreement, the preferred arrangement includes a system maintenance agreement.

With the success of the Wind energy sector in India, particularly in Tamilnadu, a plethora of entities have come into existence serving the industry. Apart from the major suppliers of bigger sized windmills there are entities who carries out erection of their windmills. A number of service providers who carries out operation and maintenance of their windmills either through a direct contract or as a manpower supplier are also there. In addition to the above installation and operation / maintenance work, they carry out service of windmill components like gearbox etc., sell spares for prospective consumers in wind industry. These service providers have their network in close proximity to the windy areas where the windmills they are maintaining are located. Thus they are very close to the villages where the market potential for small wind turbines is bright. If properly used these service providers would become a good channel partners for the marketing of small wind turbines. What is more they themselves can provide the erection and service facilities for which they have a good manpower and tools and tackles. Franchising, a special type of channel shall also be considered with these service providers In such a scenario the manufacturer has to use Push strategy where the producer makes heavy use of all of its promotional funds and selling efforts among channel members to secure cooperation and loyalty unlike the Pull strategy where the producer emphasizes advertising and sales promotion to the ultimate consumer to pull the product through the channel.

Promotion Strategies: Promotion is the Communication to the potential consumer and refers to the non-price selling activities of the firm. The SWT manufactures has to spend a good deal on this account as the product being a novel thing and requires many stages of convincing towards making a buying decision. Depending upon the market segment different types of promotional strategies can be employed. Viz. Advertising: Any paid form of non personal presentation of merchandise to a group by an identified sponsor. Personal selling: The process of assisting and persuading a prospect to buy a commodity in a face-toface situation. This strategy is applicable for the promotion among farm houses, agricultural and

irrigation activities located in the potential areas. Though this segment constitutes a small percentage, it is the only effective way. Sales promotion: It includes such devices as trading stamps, dealer aids, incentive travel, premiums, and contests and so on. As a part of sales promotion a novel idea by utilizing the brand name of leading higher capacity wind electric generators can be used by entering into a strategic tie-up with them, identifying with the products of these manufacturers. They can be offered as a bundled product with the higher capacity wind electric generators for installation at the site offices of windmill developers. Alternatively, they be used as part of community development programme under Corporate Social Responsibility (CSR) activities where the SWTs may be installed in every villages, panchayat buildings, schools and educational institutions where they are operating. Reference to the unique program called Wind for Schools in US will be of use here. Each Wind for Schools state forms a Wind Applications Center (WAC) at one of its universities to implement the program, and through class and field work students learn the wind development process. The student team, managed by the WAC leader, works with school officials and the local utility to assess alternative sites, perform utility tariff economic analysis, evaluate the wind resource, compare power curves of different turbines, meet with local planning and zoning officials, answer community questions, participate in the installation and interconnection of the turbines and monitor the turbines performance. This experience helps the students understand each step of the wind development process and will hopefully interest some of them in wind energy careers. Each WAC team is involved in the installation of three to five turbines each year. This valuable experience if properly utilized can be of immense use for the development of SWT market in India.

Non-controllable Factors: Among the non-controllable factors in the marketing mix, Governmental policies play a vital role in the promotion among rural electrification, Government Buildings and Military. The formation of Small Wind Turbine manufacturers Association is a landmark step in projecting the interests of this sector to the State and Central Governments who in turn will take policy decisions towards promoting the deserving sector to prominence. Conclusions: Unlike their bigger counterpart, SWT has difficulty in penetration of Indian market. From the experience of US & Europe, Indian SWT manufacturers have a lot of lessons to be learnt and apply to Indian conditions. An assessment of different marketing strategies in terms of marketing mix was presented. The suggestive strategies will initiate a useful evaluation among the stakeholders leading to a market boom in the dormant and potentially vibrant sector.

References: 1) Permitting Small Wind Turbines : A Hand Book http://www.rpd-

mohesr.com/uploads/custompages/awea_permitting_small_wind%2012.pdf 2) Small Wind Technology and Applications, Deepak Kelkar, Akshay Urja, October, 2011 3) American Wind Energy Association (AWEA) website 4) AWEA - In the Public Interest How and Why to Permit for Small Wind Systems 5) AWEA Policies to promote small wind turbines 6) AWEA - 2010 U.S. Small Wind Turbine Market Report 7) Indian Small Wind Association (InSwa) website hosted by WISE 8) NREL, Small (Distributed) Wind Technology, presentation 9) Essentials of Management, Joseph L.Massie 10) Marketing strategy for retailing Small-scale wind energy turbines In indian markets,Llahti

University of applied Sciences Master Programme in International Business, Management Masters Thesis 18.12.2009, Nina Maria Harjula 11) MNRE Web site 12) Pawan, News Bulletin from Centre for Wind Energy Technology, Chennai 13) 14) http://www.renewableenergyworld.com/rea/news/article/2011/03/small-wind-market-update EXECUTIVE SUMMARY: Small Wind Power .Demand Drivers and Barriers, Technology

Issues, Competitive Landscape, and Global Market Forecasts, Pike Research