How startups can help India make the switch to clean energy in the next 10 years
Across the world, energy and economic growth go hand in hand. In India, the demand for energy has been growing at a rapid rate and is expected to soar in the years to come. A slew of startups, operating in various fields and using artificial intelligence, machine learning, and analytics, are at work to help the country transition to sustainable energy sources.
No wonder then that these startups are attracting investor attention. This year, Indian startup Amplus Solar was acquired by petroleum giant Petronas for Rs 2,700 crore, for its solar energy-as-a-service business model. The fact that it owns 250 power plants, which delivered an opex-based pricing to its customers, helped. The acquisition added to the rise in interest in energy startups. Sachin Bansal soon pumped in $32 million in Ather Energy, which manufactures electric scooters. Ather Energy plans to scale up across different cities over the next two years.
Clearly, with the Indian government betting big on solar energy and smart cities, energy startups are in for the long haul. At the Shell E4 Demo Day 2019 panellists discussed the way ahead for energy startups.
“Most energy startups have been around for just five years. The energy business is a long-term game and it will take some time for them to succeed. Startups must look beyond just efficiency of energy. One needs to figure out entire solutions around renewable energy, energy storage, and electric vehicles,” said Vignesh Nandakumar, Partner at Aspada Ventures.
According to the Department for Promotion of Industry and Internal Trade (DPIIT), FDI inflows in the Indian non-conventional energy sector between April 2000 and December 2018 stood at $7.48 billion. More than $42 billion has been invested in India’s renewable energy sector since 2014. New investments in clean energy in the country reached $11.1 billion in 2018.
“I see an increased number of entrepreneurs from the energy space. At Ideaspring, we are interested in meeting companies that manage an energy network. IoT is just a small piece; there is a lot of data that needs to be crunched to ensure that the entire energy network remains stable,” said Naganand Doraswamy, Founder of Ideaspring Capital.
Transitioning to clean energy
According to an IBEF report, the Indian renewable energy sector “is the fourth most attractive renewable energy market in the world. As of October 2018, India ranked fifth in installed renewable energy capacity. According to the 2018 Climatescope report India ranked second among the emerging economies to lead to transition to clean energy”.
For Indian startups to scale, the money in the energy business is going to run into millions of dollars. It is an industry that needs strategic investments and mentors from the industry.
“The reason we were able to scale up was because we did not go after the government business. When policies for the solar sector were defined, we went after the private sector, which wanted cheaper and efficient energy. That’s when we began scaling up fast,” said Guru Inder Mohan Singh, Co-founder of Amplus Solar.
He added that when startups in the energy business deliver solutions to clients they must figure if the client can pay in the long run. “It is like a lending business; we need to figure out the credit-worthiness of the borrower. We focused heavily on this in the early years which gave us our growth,” Guru says.
The government is backing the growth of renewable energy by encouraging startups to scale. Under AGNIi mission, the government allows ideas to be mentored for commercial growth.
Ananya Chandra, AVP at AGNIi, InvestIndia, said: “Indian startups are growing fast and a lot of them want to be mentored or given market access, which is where our programme comes in. We have supported over 100 innovations in our programme. The energy sector is where startups will play a major role in the coming decade.”
All panellists concluded that while building solutions one must not just build an incremental solution, such as a connected street lamp or a solution that tracks power efficiency. The solutions must manage large-scale projects that generate and manage transmission and distribution of energy. If that is done, the energy sector is set to grow and propel India towards its new mission: becoming a $5 trillion economy.
(Edited by Teja Lele Desai)