India’s Cleantech Start-Up Ecosystem
We look at how India’s cleantech start-up ecosystem is shaping up, supported by hyperlocal players, a mix of public-private funding, and production incentives for specific industries.
As India continues to cope with the fallout of the COVID-19 pandemic, popular consensus is building around a green recovery stimulus, which includes green public investment and the adoption of clean technology or “cleantech” to ensure sustainable and inclusive growth.
India’s commitment to a clean recovery is evident in some of its recent policies, such as production linked incentive (PLI) schemes focused on cleaner systems like ACC batteries and solar modules. India has also shown willingness to aid cleantech startups to empower people in harnessing renewable energy through their AI-based services.
Artificial intelligence (AI) and machine learning (ML) have shown promise in boosting the utilization and optimization of renewable energy resources worldwide. Google’s DeepMind system has claimed to have increased the efficiency of US-based wind farms by 20 percent using ML algorithms, by predicting wind power output 36 hours ahead of actual generation.
What comes under cleantech?
Cleantech refers to the augmented use of technology towards innovations in reusing, sustainable power sources (solar, hydropower, wind energy, biofuels), green construction, electric vehicles, lighting, etc.
Cleantech start-ups in India develop technologies, business models, products, and services required to install and finance cost-effective, low carbon and resource efficient solutions.
Their scope of operations is not just limited to generation of renewable energy but also incorporates the following dimensions:
- Energy Supply
- Energy storage and flexibility
- Transmission and distribution
- Low carbon and carbon free generation
- Energy and resource efficiency
- End use
- Sustainable transport
- Sustainable agriculture
- Energy efficiency
- Recycling and waste management
- Water, land, and air quality management
- Cross cutting advance materials (green materials)
Trends in India’s cleantech industry
India has witnessed one of the fastest growth rates in renewables of all the major economies and has set an ambitious target to deploy 450 gigawatts of renewable energy by 2030. Over the last decade, the amount of solar capacity installed on the grid has increased 3,000 megawatts in 2009 to 36,000 megawatts in 2020.
Despite the pandemic led dip in investment, the year 2020 has presented many high points for the sector, led by companies offering phased enhancements to clean technologies in areas like grid management and electric vehicle charging.
Presently, it is estimated that approximately 20 percent of all start-ups in incubators in India are focused on different aspects of sustainability and a growing number of them are focused on clean electricity.
India has an existing clean energy capacity of 134 GW and aims to expand it to 220 GW by 2022, with focus on tariff reduction through technological advancements. Some Indian start-ups have achieved great strides in this objective. Here is a list of few cleantech start-ups that are helping to build a more resilient and self-reliant India.
- Oorjan: Founded in 2014, it offers solutions to set up and maintain solar panels for households and businesses and aims expand the outreach and utility of solar energy to the maximum number of people. Based out of Mumbai, it is operational in more than 14 Indian states with over 1000 customers.
- Log 9: Founded in 2015, it is a nanotechnology company that aims to revolutionize the energy sector with an innovative zero emission and low-cost aluminum air fuel cell. The startup uses ‘graphene’ to make these cells commercially viable as well as economical and sustainable for the domestic and international markets. These aluminum-fuel cells have the potential to revolutionize clean energy, electric mobility, and transport sectors in India and across the globe. After the coronavirus pandemic hit the world, Log 9 has also developed a disinfectant chamber called CoronaOven. It can be used to disinfect materials such as ecommerce packages, grocery items, wallets, electronic gadgets etc., within 10 minutes. Recently, Recently, Log 9 Spill Containment, a subsidiary concern of Log 9 Materials, has also developed an indoor air purifier named ‘Sorbene’ UV Air Purifier. This purifier can decontaminate airborne aerosol particles and minimize or eliminate risk of airborne spread of the coronavirus within indoor spaces.
- OxyGaden: It launched its first product named “Forest” in 2020. The product is an IoT (internet of things) enabled garden that purifies indoor spaces, while at the same time removing viruses, bacteria, dust particles, and harmful chemical pollutants like carbon dioxide, carbon monoxide, formaldehyde, benzene, etc., in an enclosed space. It also claims to produce 700 litres of oxygen per day.
- Husk Power Systems: Based out of Bihar, this 2007 start-up provides power to thousands of rural Indians using a biomass gasifier that creates fuel from rice husks, a waste product of the rice hullers that separate the husks as chaff from the rice. This start-up offers a flexible, service, using a mobile-enabled smart metering system.
- Karma Recycling: Working as a leading trade-in operator and redistributor of mobile devices in India, this 2012 start-up offers software and services solution that help consumers, retailers and OEMs manage large-scale buyback and trade-in program. According to them, they have restored 95 percent of the devices they have collected so far, and the remaining five percent are recycled responsibly according to their zero-landfill policy.
- Ather Energy: Founded in 2013, it is an electric vehicle company engaged in designing and building intelligent electric scooters.
In 2020, Climate Collective partnered with the US-based start-up accelerator New Energy Nexus to launch a start-up program called ElectronVibe, which is aimed at developing new business models for India’s distribution utilities, including revenue augmentation and improving grid resilience.
India has also taken the requisite steps to decentralize solar power. A few cleantech companies in India, for example, have enabled low-income households to shift from kerosene to solar power. For instance, Pollinate Energy markets and sells renewable energy lanterns and stoves on a five-week, interest-free payment plan to families living with bare-minimum necessities in the slums of Bengaluru (Karnataka).
In its attempt to strengthen the renewable energy sector, a green energy corridor is also being developed for the first time in India, in Rajasthan state, to combine solar and wind power production. This corridor, comprising a network of grid sub-stations, is expected to generate 6,311 MW green energy.
According to a 2020 Annual Funding report by Your Story, the Indian cleantech sector has received 6.7 percent of the total funding for start-ups over the five-year period of 2015-20. Venture capital and private equity players have shown an in interest in alternative energy organizations, particularly solar and wind energy organizations.
This sector allows 100 percent foreign direct investment (FDI) under the automatic route.
Laws affecting India’s cleantech industry.
India does not have specific laws and guidelines yet that oversee the sustainable energy sector. The following acts, guidelines and arrangements play a significant role:
- The Electricity Act 2003
- The National Electricity Policy 2005
- The National Tariff Policy (NTP) 2016
- The National Rural Electrification Policy
- The National Action Plan on Climate Change (NAPCC)
- Different state-explicit strategies and industrial policies
The Indian government recently announced that it is working on new regulations that will allow companies to purchase renewable electricity from state distributors at “green tariffs”. This is aimed at incentivizing companies to switch completely to renewable power and reduce India’s carbon footprint.
The need for the transition towards cleantech not only resonates with the increasing awareness around environmental conservationism but also bodes well for a low-carbon, resilient, regenerative economy. Recovery propelled by green stimulus measures has the potential to address the current challenges of unemployment and unsustainable growth, while at the same time coping with the vulnerabilities caused dur to climate change.
With the Indian government aligning policymaking towards building a net-zero carbon economy in the decades to come, India has set ambitious targets for the cleantech sector. However, to meet those targets, India needs to address certain roadblocks like difficulty in land acquisitions, clearing utility dues, easing tariff caps, improving access to finance and building investor confidence.
India also needs an enabling policy framework and regulations to encourage start-ups and businesses in the cleantech industry.
India Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in Delhi and Mumbai. Readers may write to firstname.lastname@example.org for more support on doing business in India.
We also maintain offices or have alliance partners assisting foreign investors in Indonesia, Singapore, Vietnam, Philippines, Malaysia, Thailand, Italy, Germany, and the United States, in addition to practices in Bangladesh and Russia.
- Previous Article Indien fördert die Produktion von Weißwaren und Solarmodulen: Neue PLI-Regelungen
- Next Article India’s IT Sector: Regional Hubs, Approved PLI Beneficiaries for Hardware Production