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Cleantech Industry in India
In India, the cleantech start-up scene is gaining momentum with the help of local players focusing on specific regions, a blend of public and private funding, and incentives for certain industries.
Amid the ongoing challenges the country has to deal with, there's a growing push for a green recovery strategy. This involves increased public investment in environmentally friendly initiatives and embracing cleantech solutions to foster sustainable and equitable development.
India is demonstrating its commitment to a sustainable recovery through recent policies like the production-linked incentive (PLI) schemes targeting cleaner technologies such as ACC batteries and solar modules. Additionally, India is actively supporting cleantech startups, empowering people to harness renewable energy with the help of AI-driven services.
The potential of artificial intelligence (AI) and machine learning (ML) in optimising renewable energy usage is evident globally. For instance, Google's DeepMind system has claimed to have improved the efficiency of wind farms in the US by 20% using ML algorithms. This was achieved by accurately predicting wind power output up to 36 hours in advance, aiding in better resource management and energy production.
India's cleantech industry is witnessing remarkable growth, with ambitious targets set to deploy 450 gigawatts of renewable energy by 2030. The country has seen a significant increase in solar capacity, from 3,000 megawatts in 2009 to an impressive 36,000 megawatts in 2020, showcasing a rapid shift towards sustainable energy sources.
Despite challenges posed by the pandemic, 2020 marked notable achievements in clean technology advancements, especially in grid management and electric vehicle infrastructure.
Electric Vehicle infrastructure
Approximately 20 per cent of startups incubating in India are now focused on sustainability, indicating a growing interest in clean energy solutions among entrepreneurs. India aims to boost its clean energy capacity from 134 gigawatts to 220 gigawatts by 2022, leveraging technological innovations to drive down tariffs and increase accessibility.
In line with its commitment to decentralising solar power, India has enabled low-income households to transition from kerosene to solar energy through innovative programs like Pollinate Energy's interest-free payment plans for renewable energy products in Bengaluru's slums.
Solar Power
Moreover, the development of Rajasthan's green energy corridor is set to revolutionise renewable energy production by integrating solar and wind power through a network of grid sub-stations, expected to generate 6,311 megawatts of green energy. These initiatives reflect India's dedication to fostering sustainable growth and driving forward its cleantech agenda.
Laws Impacting India’s Cleantech Industry
Currently, India lacks specific laws and guidelines dedicated to overseeing the sustainable energy sector. However, the Indian government has taken steps to introduce new regulations. These regulations will enable companies to buy renewable electricity directly from state distributors at "green tariffs."
The goal is to encourage businesses to transition fully to renewable energy sources, thereby reducing India's carbon footprint. This initiative aims to incentivise and accelerate the adoption of clean energy practices across the country.
Funding in India's Cleantech Sector
According to a 2020 Annual Funding report, the cleantech sector in India received 6.7 per cent of total startup funding between 2015 and 2020. Venture capital and private equity investors are particularly interested in alternative energy companies, especially those focused on solar and wind energy.
Wind Mills
Notably, the cleantech sector allows 100 per cent foreign direct investment (FDI) under the automatic route, making it attractive for international investors to support and contribute to sustainable energy initiatives in India.
Indian venture capitalists (VCs) have been cautious due to lessons learned from past Western "cleantech mistakes." Previously, startups in the West heavily focused on solar and wind energy solutions from 2000 to 2015, leading to an oversaturation in these areas.
However, India's diverse demographics and geography require a more nuanced approach. Cleantech solutions must address local challenges, such as green materials, low-carbon construction, sustainable automation, alternative mobility, precision farming, hydroponics, carbon capture, advanced nuclear power, geothermal energy, and more.
Investors were also influenced by an overhyped narrative created by legendary venture capitalist John Doerr in 2007, who described climate change as "the largest economic opportunity of the 21st century."
This narrative attracted federal subsidies and VC investments in clean energy, but it led to unrealistic expectations and the eventual cleantech bubble burst of 2008. In India, there's a need for refined metrics and practices to realistically assess financial returns and the impact made by cleantech investments.
Furthermore, the success of cleantech relies on government policy support, which has been lacking in some key areas. For example, the absence of a solar panel import policy in the US negatively impacted solar-related startups.
India, as the fourth-largest emitter of CO2, aims for net-zero emissions by mobilising significant funds strategically. Policy changes that support innovative business models and integrate new technologies into existing systems are crucial for achieving ambitious CO2 reduction targets in the cleantech sector.
Cleantech Strategies
Indian cleantech startups are carving out success stories that serve as models for future ventures. To generate a profitable impact, these startups can implement key strategies:
Cleantech startups should focus on creating solutions that outshine existing market offerings. By delivering products or services that excel in performance, cost-effectiveness, or environmental impact, startups can attract strong interest and demand from customers. Once customers experience these superior solutions, they are likely to remain loyal and continue supporting the startup.
Cleantech startups have the potential to not only disrupt but also positively reshape entire industries. By introducing innovative technologies and sustainable business models, these startups can open up new pathways and opportunities for various stakeholders in the industry. This transformation benefits not only the startup but also suppliers, partners, and new entrants entering the market.
Instead of relying solely on extensive marketing efforts, cleantech startups should invest in developing and leveraging advanced technologies. By building proprietary technology or adopting cutting-edge innovations, startups can establish a strong and enduring competitive edge. This strategic approach ensures long-term success by consistently delivering value through technological excellence, rather than short-term promotional tactics.
In recent years, India has witnessed a surge in patents related to green technology, particularly in waste management and alternative energy solutions. Cleantech innovations offer a unique level of protection as they are more challenging to replicate compared to startups dependent solely on marketing strategies for defence.
However, securing patents alone is not enough; startups must strategically use their patents to effectively safeguard their innovations and maintain a competitive edge in the market.
The shift towards cleantech reflects a growing awareness of environmental conservation and signals progress towards a low-carbon, resilient economy. Embracing green stimulus measures can not only address current challenges like unemployment and unsustainable growth but also strengthen our ability to cope with climate change impacts.
Sustainable Future
India's commitment to building a net-zero carbon economy is evident in ambitious government targets for the cleantech sector in the coming decades. However, achieving these targets requires addressing key obstacles such as land acquisition challenges, clearing utility dues, easing tariff restrictions, improving access to finance, and fostering investor confidence.
To foster innovation and growth in the cleantech industry, India needs an enabling policy framework and supportive regulations that encourage startups and businesses to thrive in this critical sector. By addressing these challenges and implementing supportive policies, India can accelerate the transition towards a sustainable and prosperous future powered by cleantech solutions.
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