Startup Opportunities in Solar pv

Two key words that I would like to start: “startups” and “Rs.2.44/unit”. These have caught the attention of every educated citizen in the country. The first, for the opportunity of utilizing ones ideas and potential of doing something great; the other being the lowest tariff quoted in this month in solar PV under reverse bidding. Agreed that 2.44 may be for a large solar power plant, but it’s an indication of where solar PV is finding it’s market share, competing with thermal and other conventional, non-renewable energy sources. The Startup, Make in India, and Solar target (110GW more to be added by 2022) are all the “writings on the wall” for this market. The frequently asked question is – where will the Rs.5-6Lakh Crore come from, that’s roughly our annual oil import bill. Theoretically, if we have oil pumps and consumption closed for a day in a week (refer PM’s recent call), we could have that money in 7 years! Not a big challenge! Of course, with depleting conventional fuels coal, oil, etc. we would have no choice in future than accept renewable energy sources.

There are two options available for a budding entrepreneur: be the provider or the user. The provider can be a System Integrator (SI); or EPC – Engineering, Procurement and Construction, often the name used for larger project contractor. It may be a manufacturer of components of a solar system, service provider (Operation & Maintenance, repair etc.), investor, consultant, designer, quality inspection/certification service etc. or a mix of some of these. The user (of solar energy generated) could be a captive power consumer, from homes, to factories under self finance (with or without debt) or sold/ leased by an investor who sells power at a predetermined  rate for a limited period ranging from 5 years to 25 years. The buyer of such energy could be a cost conscious consumer who not only saves money from cheaper solar energy, but also mitigates his inflation on power cost; RPO (Renewable Purchas obligated) consumer (large factories or distribution companies); hospital; college; green /CSR inclined corporate or the Government utility companies. Most except the utilities could be roof top installations or remote ground mounted open access model projects.

For the various provider types – some of the options for Rooftop, ground mounted, carports, etc. are:

• Engineering, Procurement and Construction (EPC) – partial or full, or subcontractors, self EPC
• O&M, including Infrared, drone usage
• Monitoring and control, forecasting/scheduling
• Repair and maintenance of equipment
• Development Facilitators, co investors – Captive, Sale (Govt., 3rd party), Opex
• Pay as you use (smaller systems like street lights, home packs for rural/Govt.)
• Secondary sale (e.g. Real estate developers)
• Consulting: technical, bid advisory, procurement, capability building, start up,
• Financing
• Training, R&D (at least 50,000 technicians are expected to be trained in India)
• Design Company
• Liaison
• Land, PPA, open access, broker deals
• Distribution/Stock-ist/Trader

For the manufacturing area, the following are some of the potential areas:

• Module (though there is an oversupply, so not recommended as of now) unless you are in the areas which potentially will do a technology disruption in material, or hybridize say PV & thermal, e.g.
• Inverters – (West, China, Local) – IoT, hybrid, efficient control and management
• Battery based: street, hand held lights, small modules, consumer goods (OR distribute and service imported (mainly from Asia)/local products)
• DG synchronization and micro grids
• Structures, monitoring, cable harness, electrical junction or combiner boxes, etc.
• Water pumps
• Electronic components, measurement and test equipment, training kits

As an end user, you could be:

• Captive
• Sale to Government – safe but low long term assured returns, big players and low cost funding essential
• Sale to private parties – high returns/risk, Tip is to put eggs into many baskets. One should be ready to relocate assets which is fi ne if you have done business for at least 2-3 years (as the worst case), Open access to large consumers
• Development for re-sale (secondary market), e.g. real estate model
• Independent plants or solar park
• Green buildings

The most often question is why this sector or why now to get into? For one, as a solar energy user, it’s a Low risk business as against say a manufacturing. E.g. if you were to manufacture washing machines, your input costs (import of components, foreign currency, big volume requirements), labour and serious market competition are various odds against you. In solar, input is free, cannot be controlled by political conflicts, there is almost negligible labour for O&M and the country is ever hungry for energy. For being an EPC, the entry barrier is very low, one needs to have almost no Plant and Machinery investment, its investment is in manpower and skill. However the same low entry barrier, also poses a competition to face, and so a unique selling proposition (USP) required. It can be in design, methods, products, O&M types, usability, monitoring, methods of financing etc.

The incentives from the government, like accelerated depreciation or zero customs duty, excise, nominal or nil VAT etc. – are drying slowly as industry matures. And very importantly, the technology is very reliable and mature, a solar module is perhaps the only product on Earth which is designed and warranted for 25 years with negligible maintenance (primarily cleaning solar panels). Approx. half of a project cost is of solar panels, made of tempered glass with no moving part. And the proof of the pudding is the various satellites up in space, with the only source of power being solar, and working for decades (note that the specific space category technology has very high reliability/efficiency; low weight requirements, and so the cost for those up and high are actually “higher”)!

The skills required are a mix of engineering, financial, marketing (to many clients, it may be selling a concept), project management and execution; and an entrepreneur can be ‘jack of all or some (ideally Master of at least one)’ of these skills, with hired employees who are experts in specific area. Primarily, electrical, mechanical, civil/ structural engineering are good to have for solar energy. It is important to add skills with a short term solar entrepreneurship and design course and attend a few events, exhibitions and potential market sectors/ clients to understand the gaps in the industry which you could hopefully fill in. It is also very important to have a mentor and an advisor with you. Ideally, one of them should be from the industry. Very important is good business practices and ethics, along with some exposure and connection with various stake holders in India and International arena of renewable energy. Good Luck!