The pace of rooftop solar adoption in India has gathered speed in recent years, particularly during the fourth quarter of 2017. To date, over 1.6 GW of rooftop solar projects have been installed in the country.
Investments are flowing into the rooftop solar sector from institutions like World Bank and the Government of India is beginning to recognize the crucial role rooftop solar can play in achieving the 100 GW solar target by 2022.
Recently, Oorjan, a firm active in the rooftop solar PV segment, raised $450,000 in seed funding to help expand its presence in the Indian rooftop solar sector.
Mercom’s news team spoke with Roli Gupta, the founder and CEO of Oorjan, to learn about how companies can gain a strong foothold in the rooftop solar sector and what factors affect their decision-making processes. Here are excerpts from the exclusive interview:
What segment of the rooftop market is growing the fastest and what is its scope going forward?
Both of the segments (commercial as well as residential) will continue to thrive in the next five years. The numbers will be large enough so that the relative size will matter less, but we will see a continuing separation in service providers. We are already seeing some installers focus on specific segments for customer acquisition or sub-contracting only.
You raised $450,000 in seed funding, how is that money being used?
We raised the money in June 2017. The funds are being used for sales, marketing, and development of the technology backbone to acquire and serve hundreds of customers quickly. We are looking to raise $1 million to $1.5 million currently to expand our geographic reach, build a comprehensive channel sales program enabled with technology, and integrate more financing into the offering.
What is the acceptability level of rooftop solar in India?
There is a massive customer interest, which has thankfully grown beyond curiosity in the last 2 years. But even today, the solar adoption experience is not seamless. As customers see more systems in their neighborhoods and hear positive word of mouth from early adopters, this should speed things further. Every converted and happy customer is an evangelist for solar.
What do investors think of the Indian rooftop solar sector?
Investors seem keen to identify opportunities where they can support a business to scale-up but are often unable to find businesses that are differentiated enough and have unanswered questions about how any individual team would scale disproportionately. In general, there is high curiosity, medium interest, and good teams should be able to get some early backers. The challenge, in fact, is how to go from early backers to institutionalized capital.
What are your thoughts about the need for a safeguard duty and how it is affecting the solar businesses? Are you factoring a safeguard duty into your bids?
I believe the government needs to focus efforts on capacity building rather than protectionist measures. Since capacity building takes time in India, this type of intervention will just ensure that the government will fail in their 100 GW mission. With the falling prices and high consumer demand, all of the efforts should be toward reducing the friction for the customer to allow every roof to go solar as soon as possible.
Our humble request to policy makers is that they fix net-metering but generally stop any other intervention in the market. Stopping the MNRE Channel Partner program was a step in the right direction. Curbing subsidies would also be a step in the right direction – these should be eliminated.
How are you doing right now?
Our focus remains on distributed solar for end consumers – residential, commercial, and industrial. Our technology-enabled design tool offers solar proposals instantly on site, so that consumers can make purchase decisions faster. Financing partnership and EMI options also help us to reach a wider spectrum of consumers. Our proprietary IoT technology enables all stakeholders – consumers, financiers, and maintenance folks – to track projects in real-time, including ROI, generation trends, and predictive maintenance alerts.
2017 was the best year for Oorjan in its three-year lifetime and we grew about 10 times over the previous year. We are spreading to many more locations and our offerings include both CAPEX (capital expenditure) and OPEX (operational expenditure) projects. Our access to private and institutional finance is growing fast, and this is allowing us to help fill a crucial financing and customer experience gap in the market.
What challenges are you facing?
There are four main challenges in the rooftop solar area generally, and also for us:
1) Customer acquisition cost – This includes everything from marketing to customer education and pre-sales of the system. Keeping this under control and realistic is the most important thing to focus on for Oorjan.
2) Operational scalability – Earlier we were supporting less than 10 customers at a time, this has grown to supporting about 30 concurrently. We are evolving, and the processes are being put in place to scale this even further.
3) Net metering – We understand this black box and the DISCOMs better than before. Turnaround time and friction in the entire process impacts customer satisfaction and the ownership experience. In addition, it adds ₹3-₹5 to the customer cost. With some of the ministry interventions, we hope that this will get streamlined and the customers are the ones who are set to gain the most.
4) Financing: Easy financing allows customers to adopt solar without causing immediate liquidity concerns. It’s a tough problem to solve, but we have been able to make some breakthroughs with private and public banking institutions. We have a couple of bankers in the team, including Oorjan’s co-founder Gautam Das, who is an ex-director of Citibank India, which gives us a good advantage in solving this puzzle.
Do most of your installations use the RESCO or CAPEX model? What is the ratio?
Last year, we primarily catered to CAPEX projects with EMI options and about one-third of our customers availed themselves of our financing options last year. Our latest offerings include both the CAPEX and BOOT/ RESCO/ OPEX model for end consumers with a good credit history and repayment ability. We have access to institutional as well as private investors that allows us to offer cost saving solutions to consumers and we are expecting to touch couple of megawatts in the immediate next year i.e., 2018 – ’19. We are expecting an almost equal split between the CAPEX and OPEX businesses in the next year.
How can the rooftop solar sector grow faster?
Rooftop solar is growing at the rate of 60-70 percent per year, which is not slow, but it can definitely be faster. There is no customer-side innovation in the market. There is an endless demand from 1 billion Indians and one is hard-pressed to find a company focused on delighting them. The industry, due to its lack of ideas and innovation on how to acquire customers economically, gravitates to larger projects.