Growth in Number of Profitable DRE Enterprises in FY 2019/20: Report

A new report surveying 63 DRE businesses showed that there was a growth in the number of profitable RE businesses in FY 2019/20.

The fourth edition of the ‘State of the Decentralized Renewable Energy Sector in India 2019/20’ report was recently launched by the CLEAN Network, in an attempt to present an overview of the developments in the DRE sector for the financial year. Surveying 63 DRE businesses, the report showed that there was a growth in the number of profitable RE businesses, as at least 62 percent of the members surveyed reported that they have been profitable in FY 2019/20 as compared to 45% of the members FY 2018/19. While, 86% of the members were able to meet their projected revenue. 

The report, however, also stated that the DRE sector wasn’t immune to the impact of COVID-19. 50% of the members reported increased revenue loss between quarter 4 of FY 2019/20 and quarter 1 of FY 2020/21. Members stated their opinion that to overcome the adverse economic effects of the pandemic, various sources of debt and CSR funds can be helpful.

Few Key Highlights:

• Enterprises reported lights and solar home systems (SHS) as their highest selling products. Other products such as solar pumps, improved cookstoves, and cold storages are also popular. Although most enterprises reported sales of less than 100 units for their products, low-priced products such as solar lights, improved cookstoves, and SHS recorded sales of more than 10,000 units. 
• A larger number of enterprises manufacture products with these sales numbers, indicating a greater market competition.
• Enterprises cited lack of adequate financing channels and consumer affordability as the biggest barriers to the growth of their business. This is followed by the gap in consumer awareness about the products and their benefits. Limited market linkages and distribution channels are other pressing issues for DRE enterprises.
• In terms of challenges faced by enterprises to improve market access, the majority of them cited lack of proper financing channels and consumer affordability as the biggest barriers. Consumer awareness about the products and their benefits is yet another challenge to scale business. Market linkages and distribution channels is another pressing issue for DRE enterprises. 
• Enterprises prefer either non-governmental organizations (NGOs) associated with self-help groups (SHGs) or the more traditional, distributor–retailer network to sell their products. The last-mile delivery segment is seen to be growing year after year due to their vast reach and efficient supply chain networks at the consumer end.
• Members have also reported that 1000+ educational institutions, 50,000+ health care institutions, and 700+ public buildings (including banks, post offices, and jails) are being supported by DRE technologies by either enabling or supplementing their energy access.

The report then goes on to indicate that there is maximum opportunity in rural development in areas such as health, livelihood opportunities, and agriculture; however, much remains to be done to leverage this potential. 

And wrt to employment generation by CLEAN members, 42 enterprises who participated in the survey reported a total of 1264 employees. In comparison, 42 enterprises had reported a total of 6910 employees in FY 2018/19. This shows a severe decline in employment over the past one year, which can largely be attributed to reduced business opportunities arising from the COVID-19 crisis. 

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PC: CLEAN