Yamaha Motor Co. motorcycles displayed at a showroom in New Delhi, India (Photographer: Prashanth Vishwanathan/Bloomberg)

Yamaha Looks to Green Power to Cut Manufacturing Costs in India

(Bloomberg) -- Yamaha Motor Co. plans to tap more green energy to drive production in India, the latest sign that renewable power could boost profit for industrial manufacturers.

The Japanese motorcycle maker wants solar power to supply a quarter of energy needs at its northern Indian factories near Delhi, according to company executives. Yamaha motors wants to double capacity to 8 megawatts by 2018 at a facility in Surajpur, Vice President for Manufacturing Sanjiv Paul said in an interview.

“Solar power is much cheaper at 5.80 rupees a kilowatt-hour compared with the government’s tariff of 8.5 rupees a kilowatt-hour,” Paul said, adding that the company gets about 12 percent of its current power needs from renewables for northern operations.

Falling solar-power prices have encouraged companies from manufacturers to miners to generate at least part of their energy needs from renewables. India, the world’s second-most-populous country, wants to install 60 gigawatts of wind and 100 gigawatts of solar by 2022 under a plan championed by Prime Minister Narendra Modi.

Yamaha Motors’s decision to boost solar is primarily business driven, according to Paul. Over the next 20 years, once the installations are fully amortized, the panels will help save $10 million and become company property, he said.

Yamaha used Amplus Solar, a rooftop solar company, backed by U.S.-based private equity fund I-Squared Capital, to set up its initial four-megawatt rooftop installation at its Surajpur facility. Amplus invested 330 million rupees ($4.9 million) in setting up the project and has signed a power purchase agreement with Yamaha.

Meanwhile, SMCC Construction India Ltd. installed a 340-kilowatt rooftop solar plant for Yamaha at its new Chennai facility, where manufacturing capacity will be expanded to 1.8 million units by 2020 from 600,000 at present. The company has a current production capacity of 1.3 million in India.