The 3 Week Diet System

Saturday, June 27, 2015

Start-ups provide bright spots in solar power sector

June 27:

The government may be chalking out big plans regarding tapping the potential of solar power —achieving 100 gigawatts (GW) of capacity by 2022.

Solar power

As govt struggles to achieve ambitious targets, small companies come up with ideas to reduce dependence on diesel for power. (Reuters)

The government may be chalking out big plans regarding tapping the potential of solar power —achieving 100 gigawatts (GW) of capacity by 2022 — but it would take much more to realise this dream, as there isn’t a proper framework yet to rope in the private sector in this segment in a big way. However, there are islands of excellence — a large number of start-ups that are offering niche solutions.
These start-ups have primarily concentrated on sectors where businesses are dependent on expensive diesel generators for power due to chronic shortage or unreliability of electricity from the grid. As per industry estimates, nearly 25 GW of energy in the country is produced from diesel generators, costing up to Rs 20/unit for power.
Atlanta Energy, which focuses on solar kits made specifically for the use of fuel stations, and Claro Energy, which specialises in solar pumps for irrigation, are some examples. They owe their success to the real saving generated from solar power products, combined with simplicity and robustness of their products.
In 2013, Varun Goenka, a native of Guwahati, Assam, approached ubiquitous fuel pump owners to sell them the ‘petro solar energy kits’ he had devised. These kits were specifically tailored to meet the energy needs of 24/7 fuel stations. “It helped that I already knew the business of running petrol pumps as my family was in the same business and I had seen its operations since I was a kid. So I approached other owners and managers knowing the difficulties they faced,” Goenka tells FE.
His knowledge of the business and the preciseness of Goenka’s product not only won him clients in the north-east, where he first started operating through his company Atlanta Energy, but across the country. In less than two years since it was founded, the company today has a team of 25 people and a presence in Delhi, Haryana, UP, Mumbai and Guwahati.
Atlanta Energy boasts of having executed 100 petrol pump projects and has ambitious plans of covering 3,000-4,000 pumps in the next three years, thus garnering an estimated revenue of about Rs 200 crore from R3 crore in the last fiscal. “To do this, we will also ramp up our headcount to 60 in that duration,” says Goenka.
He proudly mentions how they installed their largest solar petro-kit for an Indian Oil petrol pump in Mumbai recently, which has helped them bring down their electricity cost by 40%, from nearly Rs 1.5 lakh per month to Rs 90,000 now. He adds that the total cost of Rs 21 lakh for the 24 KW installation would be recovered in less than three years by the pump owner.
Goenka, however, expects the government to do more for this sector. “The only challenge solar companies like us are facing is easy access to finance despite the sector having been declared as a priority sector for lenders,” he says. He adds that classifying solar as a separate sector, different from conventional power generation, would allow lending institutions to provision funds for such projects, leading to accelerated growth in the sector.
As Goenka expects help from lenders, the initial success of Claro Energy, founded in January 2011, owes a lot to the government subsidy scheme for solar pumps to be used in irrigation. Claro Energy started from Bihar, which is notorious for its irregular and unreliable power supply, with state distribution companies that lose nearly half of the supply through aggregate technical and commercial losses (AT&C).
The company was founded by Soumitra Mishra, Kartik Wahi and Gaurav Kumar and has installed nearly 1,400 solar pumps in more than four years of existence. These pumps range from1 horse power (HP) to 10 HP in capacity, depending upon the area to be irrigated and the level of ground water. The company has installed half of its total pumps in Bihar, as the state and central government subsidy covered close to 90% of the cost, leaving the farmers to foot the rest of the bill. But Claro has now spread over to a dozen states and intends to ramp up its installations, which currently stand at 15 pumps per day.
“Close to a quarter of energy produced in the country is consumed in the agriculture sector and quite a bit of that is generated through diesel pumps. There is enormous opportunity in this area to cut down on fuel cost for farmers, as it accounts for more than one-third of total irrigation costs,” Gaurav Kumar, a native of Bihar and one of the founders of the company, tells FE.
For a state like Bihar where the water level is higher compared to say, Punjab, a small farmer with five hectares of land would require a 2 HP water pump. As per Claro Energy, a solar pump for this purpose would cost around Rs 3 lakh. The small farmer in Bihar would typically incur Rs 70,000 for running a diesel pump for irrigation through the year even if sporadic and low quality power supply is taken into account. “On an average, farmers, big or small, would recover their investment in three-four years from the time a solar pump starts operating,” Kumar says.
The company, which received nearly Rs 4 crore in funding from venture capitalists in 2013, is looking to ramp up its business and become a Rs 100-crore company by revenue this fiscal, quadrupling from Rs 25 crore last fiscal. It plans to scale its operations to 5,000-6,000 new solar pump installations in FY16. The company is looking to tap a market that is vast, given that Bihar alone has nearly a million diesel-run pumps active in irrigation, fisheries and pumping out drinking water.
Claro Energy is also moving away from the government-tendered projects to directly rope in farmers for a healthier mix of project portfolio. Furthermore, the company says it is providing ‘irrigation as service’ to farmers who may not be entirely convinced about getting a new solar pump installed. This approach would follow the same process as diesel pumps do in agricultural areas where farmers rent out pumps during irrigation season and return it for a pre-determined usage charge.



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