Entrepreneurship With Renewable Energy

Recently, Prime Minister Manmohan Singh announced that India is going to double its renewable energy capacity to 55,000 MW by 2017 as an effort to increase the efficiency of energy use. For making this estimation a reality, the government has proposed different efforts for exploiting the non-conventional energy sources like wind power, solar and biomass energy. Pankaj Desai, CEO, Sonali Solar says, “Renewable energy helps to bridge the global energy demand supply gap. In order to pursue in various segments of renewable energy entrepreneurs are coming forward so that eventually, clean energy can be made available for all.” Moreover, it is the one of the most effective energy-generation technique without affecting environment. Kanika Khanna, Founder, Sunkalp Energy, says, “Renewable Energy is a fairly fresh domain and gives great satisfaction of serving society via eco-friendly way. It is also the best solution to our ever widening energy crisis.” However, to make renewable energy easily and quickly accessible to society, the domain needs an influx of fresh ideas, energy, quick action and some amount of risk taking nature and this can be naturally expected from entrepreneurs. This demand when coupled with the right direction, innovative thinking and entrepreneurial spirit, it will do wonders for redefine the renewable power industry.

Renewable Vs Conventional Energy Sources

Interestingly, the most of renewable energy capacity is driven by wind, solar and biomass energy. Kanika says, “These sources of energy are abundantly and cheaply available as opposed to conventional resources such as coal, oil and natural gas. Besides, these resources are also suitable for coming generations, i.e. everyone can produce the power for their own need from resources they own.” The additional benefits of renewable energy include:

• Lower impact on environmental than conventional sources of energy
• Renewable energy appliances have long life and they save money on utilities
• To facilitate consumers to switch to clean energy, government offers extra benefits schemes and policies.
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Moreover, it reduces the dependency and burden on the national grid and will be unaffected in case of failure of parts of the grid. It also helps all industries that are directly and indirectly dependent on energy for functioning and affected by fluctuations and disturbances by electricity flow. Manufacturing, which constitutes 15 per cent of the Indian GDP, cannot function without a constant supply of energy. Renewable energy with appropriate backup will help to improve this condition and contribute to strengthen the Indian economy by creating loads of job opportunities.

Solar Energy Critical Contributor to Renewable Energy

The solar energy can be the major contributor to the total energy with a potential 5000 Petawatt-hours per year. However, there have been only 1040.67 MW of energy produced by solar power that is just about 1-2 per cent of total energy. About current scenario, Inderpreet Wadhwa, Founder, Azure Power, informs that in the last three years, India has added over 1.2 GW of solar power capacity to its total source of energy. To fulfill the need of electricity and meeting the peak demand shortages of power, solar energy is emerging as a promising and reliable alternative. There are a lot of prospects and any key players have entered in this space for providing end-to-end solutions.

Key Players

Hemant Lamba, Co-Founder Aurore (Auroville Renewable Energy)

Hemant Lamba, a renewable energy believer, co-founded AuroRE (Auroville Renewable Energy) in 1998 and has created thousands of solar energy entrepreneurs in rural India. However, he has been engaged in the promotion and development of solar energy since 1994. Lamba says, “To become more users friendly, we are following alternative delivery models like renting of products instead of selling them.” These types of business models are offering huge opportunity of local enterprises to come forward in this sector. He explains, “In this process, we take help from local renewable energy enterprises who helps in delivery of goods and services to local customers.” He further says, “We aim to make solar energy affordable to everyone so we have also offering innovative finance schemes.”

Inderpreet Wadhwa, Founder, Azure Power

After a successful stint in Silicon Valley, Inderpreet Wadhwa thought of starting a venture that would have a direct and positive social impact with respect to improving the livelihoods of rural India. He share, “I researched on the rural economy of India and considered information delivery and micro finance opportunities there. I realised that people in rural India are still lives in dark and fight for basics of life.” His enthusiasm for solar power engineering and Indian government policy thrust around rural electrification via clean energy delivery motivates him to incorporate Azure Power in 2008. Today Azure Power is delivering clean energy applications to governments, communities, and commercial customers throughout India.

Kanika Khanna, Founder, Sunkalp Energy

After understanding different markets opportunities in solar energy, Sunkalp energy focused on turnkey roof top solar power solutions for schools. Kanika Khanna says, “We offer our clients engineering, procurement, construction, subsidy approval and loan assistance services. The cherry on the cake however, is complementary solar laboratory equipment that has been developed in house and is offered with every school project.” She adds, “Schools are perfect for the application of solar power because with the generation of clean energy, the solar power systems in schools serve as learning grounds and sources of inspiration for the leaders and policy makers of tomorrow.” Sunkalp Energy is also working on developing solar powered mini-grids for villages in rural India.

Pankaj Desai, CEO, Sonali Solar

Sonali Solar decide to venture into solar industry with future demand and growth. Pankaj Desai says, “In order to pursue excellence in technological advancements of various renewable energy concepts, we pursued in this business. Today, we manufacture Solar Modules in compliance with Global Standards including IEC 61215, 61730-1, 61730-2, 61701, UL1703.” However, it was established by entrepreneurs who have been indulged in diversified industries for over five decades with the intention of providing products with top quality and reliability standards.

Nikhil Jaisinghani, Co-founder, MGP (Mera Gao Power)

Nikhil Jaisinghani co-founded MGP in 2010 with the aim to electrify Indian villages and setting its solar micro grids in different village. These micro grids generate sufficient electricity to run low wattage appliances more than 30 households for seven hours every evening. Nikhil Jaisighani says, “We were self-funded for the first-and-a-half year. We raised grant funding at the end of 2011 and in early 2013 we raised equity investment. We aim to lighten up 100,000 households by 2014.”

Growth Drivers

Blessed with abundant natural energy sources and favorable factors like geographical location and large population, India is ready to become one of the fast emerging renewable energy markets in the world. Currently, India is suffering from shortfall of electricity generation capacity and tries every possible effort to promote active enterprises in this sector especially those who are in solar energy utilisation. As per the data, almost 40 per cent of the population of India does not have access to reliable power. Explaining about the reasons for market growth Jaisinghani, says, “India is a tropical country blessed with good solar power energy radiations equivalent to more than 5,000 Trillion kWh per year. The sector is emerging a lucrative market with huge potential for growth in a clean way.” Additionally, the rapid growth of other development programmes demand more power supply and support the solar energy as an alternative source for fulfilling their power demand.

Potential for SMEs

Indian solar power industry is growing rapidly with great potential for all level enterprises. As per the latest study report by Ernst & Young’s, India ranks on fourth position (after the US, China, and Germany) in renewable index and third on the wind index, and ranks second on the solar index. So it comes under the top nations in terms of its market potential for solar energy. Lamba says “India's 60 per cent population still suffers from unreliable supply of energy and cooks food by using dirty fuels. Renewable energy offers possibilities to users to take care of their energy needs by using their own investment. This creates fertile ground for medium, small or micro local enterprises to service these needs.” Khanna adds, “More and more people are interested and trying to get educated about renewable energy. However, as the investment is little high, only the most seasoned of customers are willing to invest." There is a need to be filled and the demand favour entrepreneurs to succeed in this sector.

Scenario that Favours Entrepreneurs

Renewable business scenario in India is moving away from policy driven to parity driven and more entrepreneurs are coming forward to with the vision to lighten India in eco-friendly way. In addition, with the installation of over 1.7 GW Solar PV capacities in May 2013 the new growth directions have opened. Desai says, “For the development of renewable energy the Jawaharlal Nehru National Solar Mission (JNNSM) aims to produce 10 per cent of its energy from solar-20 GW-by 2022. In order to gain from India’s solar energy potential, several states have been pro-active in promoting solar by the way of separate state level policies and incentives norms.” Khanna adds, “There are a lot of companies in the market. However, now a level of consolidation is taking place with several of the larger companies acquiring smaller ones and some of the inefficient players exiting the market.” She advises, “Entrepreneurs should consider this space only if they have a good background in the area and are ready to work in an extremely competitive environment in terms of costs and quality.”

Other Supportive Programmes

Solar energy is being promoted aggressively by the Ministry of New and Renewable Energy. To become a leader in solar energy both the Centre and the States governments are doing joint efforts and have come up with different development programmes like ‘demonstration programme,’ and the Jawaharlal Nehru National Solar Mission. Making solar power affordable states like Rajasthan and Gujarat are following a progressive framework. In addition, many other states are following them and are promoting solar power via different modes. Apart from these, social solar entrepreneurship is taking root with the mission of educating and power rural India. As per a report by National Research Development Corporation (NRDC) and, the Council on Energy, Environment and Water (CEEW), in just two years -- India’s National Solar Mission has transformed the solar market in India. Lamba concludes, “A focused programme for developing renewable energy enterprises by the Ministry of Medium, Small and Micro Enterprises would help in catalysing new renewable enterprises.” Besides, the investment programme by SDIBI would also help young entrepreneurs with new ideas to start with ease.

Latest Trends

There are opportunities at all stages of ladder in supply chain of solar energy. Solar water heating has grown rapidly in urban areas, now solar UPS and solar street lighting is picking up. Lamba, explains, “In rural segments marketing of solar home systems, solar pumps and small micro grids is developing into a big opportunity. Small scale wind energy and hybrid plants are another area of growth. Another opportunity worth Rs.25, 000 crore in clean cooking appliances is ready to welcome entrepreneurs. Currently the following solar projects are in demand:

a)     EPC For rooftop projects

b)     System Integration of Solar PV Products

c)     Consultancy for setting up Solar PV Projects

d)     Solar Module and Products Manufacturing

Advantages of Solar Power

The greatest advantage and opportunity for solar power in India is its potential to meet peak power shortages, owing to the fact that solar works well at peak loads. A more realistic cost comparison for solar power for use in industries would be with the cost of diesel gensets, the latter being the most omnipresent choice to meet such power shortages. Replacing DG sets with solar power will not increase costs while providing power that is environment friendly.

Wadhwa adds, “The real opportunity of solar-PV-based electricity is that it can be generated close to demand centres, thus avoiding large transmission and distribution losses. Beyond this, decentralized solar energy can make a real social impact with benefits like local job creation and economic empowerment etc.” Setting up decentralised solar power plants based on solar power also prove beneficial to the environment and help solve environmental problems rapidly, since 1MW of solar power is equivalent to the removal of 1200 tonnes of carbon dioxide per year. Another area where distributed model of generation can contribute significantly is villages/hamlets that have no electricity. Distributed model has the potential to bring 20 percent of all Indian villages under the ambit of solar power. Kanika concludes, “Solar energy can be applied all the way from small lanterns to large MW scale plants. Business opportunities are various depending on the risk appetite, technical expertise and financial capability.”

Fundamental Challenges

Compared to any other established technology this sector is not yet a highway. However, First Solar noted that the single biggest challenge for the sector is availability of funds. Khanna tells, “There is great need to educate people about renewable energy. Most people still feel it is unreliable, the truth being that there have been amazing technological advancements making. Including this high capex, people are unwilling to invest even though the Rate of Return is highly competitive for most technologies.”

Lamba says, “This sector is still emerging our conventional finance system like banks are not happy lending money to entrepreneurs. Sourcing capital becomes a big issue. Access to knowledge can also become a barrier. There are pockets like Bihar where despite of no support from agencies local enterprises are thriving. In these areas people are deprived of conventional choices. Renewable becomes a forced choice for those who can afford. This strong user needs has driven the growth of local entrepreneurs in some reomote pockets of India.”

Market Future

Energy is one of the biggest concerns of our generation and shall remain so for time to come. There is a market gap and a lot of work to be done and money to be made there. Energy resources in India have been under severe pressure due to substantial economic growth, urbanisation, growing wealth and rise in the per capita income etc. Wadhwa adds, “The imbalance created in the demand and supply has forced the government to implement schemes for expanding energy supplies. About 80 per cent of the oil is imported in India, which is major area of concern for the local government with regards to energy security in the near future. Hence, clean energy may help reducing this gap as well as become a major factor in meeting the energy needs of the people of India.”