Opportunities, Challenges and Scope of Clean Energy in India

Author: Tarun Mehta, Co-Founder and CEO, Ather Energy (India)

Econ 101:

Technology of tomorrow does not lag on any parameter from the technology of today. That phrase often hasn’t been true in cleantech innovations. Solar has always been cleaner than coal but wasn’t cost effective, until recently. Recycling made no economic sense until an entire industry popped up to mint back those valuable metals out of smart phones. Electric vehicles came up before IC engine vehicles but failed to gather any momentum and were considered a novelty, until recently.

The point I am trying to make is that we live in a capitalist system, and for any tech to really take-off you need an economic incentive. Without those, the most noblest of ideas will eventually flounder and with those entire industries will churn.

What’s happening with EVs and Solar?

Things have changed very rapidly in the last 2 years. Solar PV prices have crashed by several times and the math almost works out. It makes economic sense and coupled with a sense of freedom and concern for the environment makes for a great business case.

Electric vehicles have started to make sense for a lot of customer given their low running costs. Traditionally, the high upfront costs (due to batteries) have been a major deterrent but due to the efforts of companies like Tesla, battery prices are currently on a free-fall worldwide.


While there are a lot of opportunities, starting up in either of these sectors is still quite challenging. Most ventures in this space are capital intensive and as such need significant investments upfront. Unlike the lean model of software, it’s very hard for an entrepreneur in this space to show traction or build a minimum-viable product. Development times are longer and most of the sector needs regulatory approvals and a slew of partnerships before it can really take-off.

I would rate the following as critical for any venture to succeed in cleantech:

  1. Secrets – hold a thesis/an idea that nobody else yet believes in or understands. Without this you are mostly competing in a commodity business and the returns are going to be low.
  2. Team – whether it’s a product or a service, a team which has the technical chops or the right attitude can take a long time to put together. The job is so much harder because often poaching is not an option given the lack of competition.
  3. Financing – it’s imperative to get enough people with capital to believe in you and your idea and back you repetitively for years.
  4. Scale of improvement – especially important for a startup. While an established company can afford to target a few percentage points of improvement in efficiencies, a startup must be able to get a disproportionate amount of output for the effort it puts in (especially when the effort is going to be as huge as a cleantech company’s). Thus a typical target should be an order of magnitude higher than the incumbents.
  5. Channel support – if you are building a product. A supportive manufacturing eco-system, willing group of dealers and functional logistics networks are a necessity.

While they are true for many other startups the above are critical for many in the cleantech space. A food delivery startup can poach talent, an electric vehicle startup often cannot. Month on month growth does not start for years and the milestones are very different.

But the upside is that a company which gets through all of it (raises multiple rounds of capital, buys itself time to figure out the product/service, gets approvals going etc.) builds a solid competitive moat around it.

Unlike a lot of other sectors where a new competitor with more cash can burn an established firm to the ground or the consumers are famously ‘fickle-minded’, cleantech suffers from no such problems. It would take one years to build better distribution, put together a better team, hone the financing model and finally become profitable/sustainable.

Best time to startup?

In the current market, esp. in India, you can work around many of the above challenges. Capital, while still very limited, is available. Due to the successes of companies like Solar City and Tesla many investors have opened up to the idea and can see the potential value creation out of similar companies. This in-turn has led to an increase in salaries which in-turn has started attracting many Indians to return. This brings back a lot of useful skills which might have been hard to find in the domestic market. Add to this supportive campaigns like the ‘Make in India’ campaign and an increased customer activism, you almost have an acceptable ecosystem.

The verdicts on the startups coming up today will be out in a few years. The potential is decidedly huge. The energy and automobile sectors alone are worth several billion dollars each – in every state. Startups, for the first time, have the opportunity to truly disrupt these behemoths and kick-start a new economy all together.

We live in exciting times.

Disclaimer: This is a guest post. The statements, opinions and data contained in these publications are solely those of the individual authors and contributors and not of iamWire and the editor(s).

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