India is the 5th largest power generator in the world and is projected to be the 3rd largest by 2030. Its peak power deficit already stands at 12.6% and is expected to grow significantly in the coming years. The World Bank has predicted that 60% of India’s aquifers will be in critical condition in 15 years time.
For India, continuing its growth momentum while sustaining a healthy environment is a critical imperative. Cleantech can help ensure that these two goals are met.
1. India’s coal tax could raise $650 million for cleantech innovation – As of 1 July 2010, the Indian government began levying a tax of Rs 50 (~$1.1) on every tonne of coal mined in the country as well as that imported from abroad. The tax has the potential of raising $650 million in revenues which will be put towards a “Clean Energy Fund” for the research, development and deployment of renewable energy technologies.
2. Hydro is flowing strong - Hydro electric power generation accounts for 23% of India’s power generation capacity. Moreover, there is currently 46 GW of hydro capacity either completed or under development. Interestingly, only 3.5% of completed projects have been developed by the private sector. 69% of the hydroelectric development opportunities still remain untapped and the Indian Government is targeting 15GW of additional hydro capacity in the 11th 5-year plan. Contrary to previously developments, much of the new capacity is being developed by the private sector.
3. Solar is getting hotter – 2010 witnessed the approval of the much awaited “National Solar Mission” under the Jawaharlal Nehru National Solar Policy and the first phase of the mission is now under implementation. One of the key targets in the first phase is to have 1,000MW of grid connected photovoltaic’s (PV) by 2013.
4. Wind is still blowing hard – Wind energy accounts for 6.9% of total installed capacity in India, ranking the 5th highest globally. The Indian Government is incentivizing the continued development of wind farms by providing a “generation based incentive” of Rs 0.5/kwh or accelerated depreciation for 10 years.
5. Water is everywhere, but not a drop to drink – Adam Smith presented the “paradox of value” or the “diamond-water paradox” which stated that water, although much more useful than diamonds, commands a much lower price. With water scarcity constantly increasing, will we witness a monumental change where water is as expensive as or more expensive than diamonds? Analysts claim the overall water opportunity in India amounts to ~$30 billion. Although agriculture remains the dominant consumer of water for the foreseeable future, demand growth from municipal and industrial sectors is now rising significantly, particularly in India.
6. Waste management & waste to energy - Waste management sectors of particular interest in India include municipal, industrial, biomedical and e-waste. Under the 11th plan, GOI allocated 22 billion Rupees ($500 million) to the solid waste management sector; JNNURM sanctioned 15 billion Rupees ($340 million); and UIDSSMT has committed 28.2 billion Rupees ($636 million) for solid waste management projects in small towns. The Ministry of Urban Development has also taken numerous steps using Public Private Partnerships towards the better management of waste in India.
7. Waste to energy is starting to generate traction but is at a nascent stage - At latest count, there were 48 developed projects amounting to 68MW of energy generated. Most of the waste management companies are putting plans in place to setup more waste to energy plants.
8. Clean agriculture in India – India is one of the major agrarian economies of the world and has a fast growing population with rising per capita income. These factors have placed significant pressure on agricultural productivity and have created significant investments opportunities in technologies that help improve crop yields and reduce water consumption, energy and land usage.
9. The off-grid opportunity – Unlike developed nations, the electric grid is not pervasive in India – nearly 400 million people in India do not have grid access. Solar, wind and bio-energy are seen as good solutions to providing off-grid energy users with power. It is also a good opportunity to proliferate energy efficient technologies and small scale energy storage. There are several startup companies developing interesting products such as solar lanterns, heaters, cookers and energy storage devices for the developing world.
10. The venture community in India is garnering interest in cleantech - Over the last couple of years, the VC and PE community have taken a keen interest in the cleantech sector in India. Broad infrastructure investors have made specific allocations for cleantech and a number of cleantech focused funds have also recently closed or are raising capital. Examples include BTS Advisors, IDFC and Omnivore Capital.
Shawn Lesser is the president and founder of Atlanta-based Sustainable World Capital, which is focused on fund-raising for private equity cleantech/sustainable funds, as well as private cleantech companies and M&A. He is also a founder of the GCCA Global Cleantech Cluster Association. Prashant Maniar is the Crossborder Practise Head of Energy & Environment at Cipher (www.cipher.in)
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