STARTUP SPECIAL ..............Here Comes the Sun

STARTUP SPECIAL Here Comes the Sun





Azure Power is a pioneer of sorts in solar power, but it now has to reckon with deep-pocketed competitors

Inderpreet Wadhwa, founder of Azure Power, comes with a compelling pedigree. Born and educated in India he moved to the US where he did his MBA from the University of California, Berkeley.He went on to hone his entrepreneurial skills in Silicon Valley, where he lived for a decade and worked at a raft of tech ventures.

It was in 2007, when on a personal trip to India, that the startup bug bit and solar fever struck. “Talking to government folks here made me feel there was enormous potential (in the solar energy sector),“ he recalls. Even the challenges -both internal and external -were enormous. There was no regulatory framewor for solar power in India then. Cost structures were steep. But the bigge challenge came from his father. “He was extremely skeptical and didn't want me to leave a cushy career in the US for the grind here,“ Wadhwa recalls.

Today, all that is history, thanks in a large part to India's well-structured national solar policy, which has set an aggressive target of 1,00,000 MW from solar power by 2022, from just 3,000 MW in December 2014. Wadhwa's ambitions are on a similar track. His pure-play startup is “one of the most successful and oldest players that has managed to get funding from reputed investors like International Finance Corporation,“ says Vinay Rustagi, manag ing director of consultancy firm Bridge to India. Azure has close to 250 MW of solar capacity and about 515 MW in the pipeline across 14 states, much of it in Punjab. As for his father, “after I won a contract I turned him around; he is now on board,“ says Wadhwa.

Investors look at Wadhwa as a pioneer in the sector. “He entered solar when it did not exist in India. Azure is well positioned to build 5 GW of solar in three to five years,“ says Sanjeev Aggarwal, cofounder of Helion Venture Partners, and an investor in Azure.

The renewable energy space is a $250-billion investment opportunity in India, according to some estimates. With the Modi government backing renewable energy to the hilt, the sector can be expected to get plenty of policy support to smoothen the glitches. So, from beefing up the grid network and setting up solar parks, to regulating tariffs and working out mechanisms to insulate solar power producers from indebted electricity boards, a slew of initiatives are in the works. Further, with better solar technology and dipping costs, solar power is almost reaching grid parity, increasing its appeal. Azure Power faces two big challenges, one of them being the winner's curse. What many call irrational exuberance, aggresive bidding is driving tariffs to unsustainable levels in the sector. The latest winning bid in Andhra Pradesh was at `4.63 per unit, which could raise viability concerns. “This concern has been there in every bid in the last three to four years,“ says Santosh Kamath, head of renewable energy, KPMG in India, seeking to allay such fears. Two, the sector is seeing the arrival of big money, from the likes of SoftBank (with access to cheaper funds), which wants to invest $20 billion in solar projects in India. So relatively smaller players like Azure will be up against it. Rustagi, for his part, reckons Azure will hold its own.“This is just the tip of the iceberg. I think different players will find their niches.“ Well networked in India, Azure will be equipped to bag and execute smaller projects that are unattractive to large players and also tap niches like rooftop projects, which it is eyeing aggressively.

ETM3JAN16