India has millions of Micro, Small, and Medium Enterprises (MSMEs), which are the growth engine of its economy and represent the nation’s entrepreneurial spirit.

Power is one of the largest components in the input cost of an MSME, and given the availability of sunshine across the country, going solar is an ideal way to reduce operating costs and hedge long-term electricity inflation.

Over the years, falling costs of solar, tax incentives, and increased awareness have resulted in rooftop solar growth in MSMEs, but there has not been a radical uptake. Despite the tremendous potential, scaling rooftop solar has been challenging due to multiple reasons. One such challenge that’s less discussed is customer acquisition strategy.

In this multi-part series, I would share some of the learnings from my travels selling solar to MSMEs across India. In a diverse and complex country, it is imperative to understand the cultural and business nuance at the last mile.

Critical Drivers

Two critical drivers support MSME solar adoption. The first is the obvious – cost savings. It is critical to map which states and industries have the highest C&I tariffs, but it is also important to determine the net savings on the electricity bill after solar has been deployed.

If the net savings on the bill, after paying the EMI, are less than 5-7%, the hassle of solar and the risk of damaging the roof far outweigh the incremental savings. The accelerated depreciation tax benefit is also not seen as a major driver.

MSMEs regularly buy equipment and have a good understanding of depreciation. Net electricity bill savings have to be large enough to garner interest.

A major non-financial driver to consider is if your customer is an exporting entity or one that is selling to a large Indian / international player, which has to measure Scope 3 emissions.

In the pursuit of decarbonization, large corporates are mandated to work on their Scope 3 emissions through their supply chain. It is not uncommon for a large international buyer to visit the MSME to check for quality and safety standards but also check for green and climate-friendly practices.

Approach

According to the MSME ministry, India has over 400 industrial clusters, and they are the best place to launch your go-to-market strategy. This is because factories are geographically close to each other. They may be a single industry cluster like Chakan, Pune (Auto and Auto Ancillaries), or multiple industry clusters like Tarapur in Boisar (Chemicals, Textiles, Steel).

The buy-in from the local industrial association will be critical to amplify your offering. Awareness events at these associations – with chai, samosa, and biscuits – are the best way to get in front of customers and then get invited for a one-on-one meeting at the factory. A lot of business happens over chai in this country.

Please study the health of the industry before approaching the cluster. I once made a trip to Chittorgarh only to realize that the marble industry was reeling with headwinds from demonetization and 28% goods and services tax (GST).

It helps to have a grasp on the energy situation in the cluster – sometimes the power distribution company’s (DISCOM) office is in the cluster itself, and you will get a first-hand understanding of the last mile efficiency for changing meters and any other permissions.

It is highly likely that SMEs will not purchase the equipment outright and will ask for financing and have some options ready. A large cluster would usually have a small branch office of a public sector bank – meeting the branch manager there will also give a sense of the business activity in the cluster.

Don’t miss the nuance

Many of the customers will be family-run businesses; hence, it will be critical to quickly ascertain who the decision maker is. In these firms, the promoter looks at the finances but depends heavily on the opinion of their chartered accountant, who might act as a gatekeeper.

Having the required numbers ready will help in moving through the sales process quickly. Communication will more likely happen on WhatsApp rather than email and in the regional language rather than English. It’s essential to find someone who speaks the local language, ideally from the same area.

The real India moves at a slower pace than the big city rush. Constant follow-ups are not required, after a point, let the magic unfold – solar is important for an industrial customer, if they trust you and if the need arises, the customer will themselves find a way to reach you.

In the following parts of this series, we travel to different parts of India and look at specific industrial states and clusters where I have had the joy of having very sweet chais.

Mercom India’s C&I event series is targeted to get solar service providers in front of C&I consumers throughout India. Find out more here.

(Author: Sishir Garemella, Founder Sunvest and Head of International Business Development for PV Evolution Labs. More articles in the series will follow. Watch this space.)