By the end of the first decade of the twenty-first century, the negative impact of a fossil fuel-based energy economy was crystal clear. Led by California, but closely followed by players elsewhere, aggressive research in renewable energy had begun. Solar energy was one of the most promising sectors of renewable energy.
Governments were waking up to the potential of renewable energy and greenhouse gas policies. Public awareness of the environmental impact of fossil fuels was rising. The unstable geopolitical environment of oil-producing regions was a cause for concern, especially for the major energy-consuming economies like the US and the emerging markets like India and China. Most importantly, the narrowing cost differential between photovoltaic electricity and grid electricity was finally making solar energy a viable alternative, although the forecast for grid parity was still a few years out.
In the United States, there had been 46 solar cell IPOs between 1995 and 2007, with 35 of these between 2005 to 2007. Total solar cell IPO capital raised since 1995 was $7.33 billion, with over 75% of the total raised between 2005 and 2007. The solar entire solar industry raised $5.8 billion in public capital in 2007, up from $2.2 billion in 2006 and $1.5 billion in 2005. The Solar sector was heating up.
India, with about 200 clear, sunny days a year and the potential to produce 5,000 trillion kilowatt hours of power per year, needed to join this movement. But India’s sun resource was grossly underutilized, mainly due to a total lack of policy initiatives but also to limitations in energy storage technologies.
Meanwhile, a large number of villages in India remained without electricity. Even in the major metropolitan areas, constant power cuts were routine.
The photovoltaic cell industry thus far was full of solutions that were fairly basic extensions of relatively mature technologies, but not the cheapest, most scalable long-term solutions. Much of the entrepreneurship was therefore directed towards research and development of new thin-film photovoltaic cells using materials such as CIGS and organic films on different substrates, as opposed to a silicon-based solution.
Our venture, AdiShakti, was one such effort.
Our research lab in California, handsomely funded by Silicon Valley venture capital, cracked the problem in 2012. A path-breaking thin-film photovoltaic cell was invented that drove 40% conversion efficiency, making it possible for us to achieve grid parity.
We decided early on that our market was going to be India, where the market was potentially large. We also assessed that the cheap labor there would make it viable for us to achieve attractive cost metrics for installation and support.
We ramped up our solar cell manufacturing plants from 2012 to 2018 in Rajasthan, Uttar Pradesh, Bihar, Madhya Pradesh, Haryana, Orissa, West Bengal, Tamil Nadu, and Maharashtra.
Our main marketing channel in the urban geographies was construction companies and real estate developers who had caught onto the “green building” phenomenon. It had become fashionable among Indian consumers to want to live and work in “green buildings”. Both residential and commercial developers were aligning themselves with this demand, retrofitting existing buildings and of course, equipping new buildings to be solar powered.
The Indian government also created incentives for developers to build solar capacity, and for consumers to use solar power as their primary energy source.
Soaring urban demand alone drove us to a point where, clearly, capacity was the bottleneck.
Despite global demand for these cells, the government gave us incentives to stay focused on the Indian market.
We also wanted to get to the rural Indian market, for which a different strategy was devised. A new genre of companies called “rural utilities” came into existence. Aided by attractive financing schemes, these decentralized rural utilities set up solar farms in villages. The government invested in building the grids and allowed the rural utilities to connect to them, thereby creating a scalable infrastructure for rural electrification.
Between 2018 and 2020, AdiShakti has acquired four such rural utility companies. Our plan is to acquire a few hundred of these as they achieve scale and profitability. In some cases, we have participated in financing rural utilities, so we have a deep understanding of what it takes to scale these companies.
We consider it our responsibility to convert India to a 100% solar-powered economy by 2050. In the process, we are creating enormous wealth throughout the solar ecosystem – from rural utilities to green buildings – as these entrepreneurs partner with us for technology and financing.
Adi-Shakti, needless to say, is now one of the world’s largest corporations.
A call to Indian entrepreneurs everywhere, Vision India 2020 challenges and inspires readers to build the future now. In this “futuristic retrospective,” author Sramana Mitra shows how over the next decade, start-up companies in India could be turned into billion-dollar enterprises. Vision India 2020, which encompasses a wide range of sectors from technology to infrastructure, healthcare to education, environmental issues to entertainment, proves how even the most sizeable problems can be solved by exercising bold, ambitious measures. Renowned in the business world, author Sramana Mitra conceived Vision India 2020 from her years of experience as a Silicon Valley strategy consultant and entrepreneur. Well aware of the challenges facing today’s aspiring entrepreneurs, Mitra provides strategies, business models, references, and comparables as a guide to help entrepreneurs manifest their own world-changing ideas.
This segment is a part in the series : Vision India 2020