Pepulse CT 2010

Private Equity Pulse
on Cleantech
JULY 2010
Contents Page No.
Executive Summary 3
PE and M&A in Cleantech 4
What PE/VC investors think 10
Opportunities for PE in Cleantech in India

13
- Parag Sharma, KPMG
Green Infrastructure - A Viewpoint

17
- Shivani Bhasin Sachdeva, India Alternatives
Myths, hypes and realities of Solar Power

22
- Rama Bethmangalkar and Siddhartha Das, Ventureast
Opportunities and Challenges in Solar sector

27
- Kalpana Jain and Sandeep Negi, Deloitte Touche Tohmatsu India
Restructuring the recycling industry in India

33
- Josephine Bournonville and Vikram Nagargoje, Aloe Private Equity
Opportunities in the Carbon Market

36
- Ritesh Banglani, IDG Ventures India
Where's the deal action in Indian Cleantech?

39
- Sagar Gubbi, Ecoforge Advisors
Cleantech Investing The legal perspective

40
- Charandeep Kaur, Trilegal
Listing of Investors with special focus on Cleantech 42
Listing of Advisors with special focus on Cleantech 45
© TSJ Media Private Limited. All rights reserved.

Executive Summary
Parag Sharma of KPMG sets the tone for the report in an article highlighting the opportunities and challenges facing PE investors in
Cleantech. Citing how the accelerated depreciation incentive has helped India to become one of the top players in wind energy, he says the
new government policies relating to Solar Energy are set revitalize that sector. “The large solar capacity addition plans by centre and state
governments ensure that there is a lot to play for and for a lot of players,” he concludes.
The article by Shivani Bhasin Sachdeva, CEO of PE firm India Alternatives, points out how, from a private equity perspective, Cleantech
presents both “good news and bad news”. The “good news” is that the market is huge and growing fast. The installed generation capacity
from renewable energy has increased over ten-fold during the last decade and will continue to grow steadily, leading to an investment
requirement of US$20 Billion over the next few years. The “bad news” is that certain aspects of Cleantech are still reliant on government
subsidies and the gestation period for Cleantech projects may be longer than the average holding period of private equity funds.
She debunks the myths surrounding Cleantech investments in India and points out that green infrastructure investing is more about
manufacturing and infrastructure development than about making pure play technology bets. Shivani also believes that the Cleantech
sector provides non linear growth opportunities which can result in rapid scalability of businesses in relatively short order.
In their article, Rama Bethmangalkar and Siddhartha Das of VC firm Ventureast point out some of the “myths, hype and realities” of solar
power. With technology rapidly bringing down the cost, there are already many applications - be it powering remote villages, cell phone
towers, or street lighting - where solar already is the least expensive source of power! Continuing with the theme of clean technology, they
point out how, with 1.1 billion people lacking access to safe and potable water around the world, water quality management and waste water
treatment are priorities, especially for the developing world.
Kalpana Jain and Sandeep Negi of Deloitte highlight how solar energy, which currently plays a small role, is expected to increase its share in
the Indian energy market. The launch of the National Solar Mission along with subsequent regulatory initiatives by the Government as a part
of implementation of the mission provides an investment and revenue generating opportunity of over US$ 40 billion across the solar value
chain from polysilicon manufacturing to generation. The key challenge for faster adoption of solar in India is higher setup cost as compared
to fossil fuel based power plants. However, this challenge seems to be addressed as during the last 2 decades cost of setting-up solar power
reduced by 20% with every doubling of installed capacity.
The Aloe Private Equity article on the waste management and recycling opportunity points out how, as nearly 10 million Indians subscribe to
a new mobile phone line every month, the amount of waste batteries will become tremendous. A battery is made of very valuable materials,
and new techniques are emerging to recover the maximum proportion possible. The article also says that it is important to integrate and
capitalize on existing systems while building the waste management models of the future. One should not see the informal sector as a direct
competitor to a formal sector in its infancy, but rather as the basis on which to start a comprehensive scheme, able to access a very wide
market more rapidly. Aloe has also provided a case study of the Greenko Group which it seed funded, helped ramp up via acquisitions and
take it public (on the UK AIM exchange).
Writing on the carbon credits opportunity, Ritesh Banglani of VC firm IDG Ventures India points out how while India's role in the carbon
market is currently very small compared to the size of its economy and its power industry, its registered carbon credits is expected to grow to
33% by 2012, by when it is also expected to be the world's fastest growing CER supplier. In addition to the global carbon trade, a large
domestic market is expected to come up in the next 5 years with the introduction of two new domestic cap-and-trade programs. Banglani
also points out that the biggest challenge in the carbon market is the uncertainty about the continuation of a cap-and-trade carbon regime
after the Kyoto Protocol expires in 2012. He feels there are several significant opportunities for Indian services companies in every part of
the carbon value chain - from Carbon Advisory to IT Services for the segment.
In his interview, Sagar Gubbi of Ecoforge Advisors says the sectors within Cleantech that are likely to generate the most interest among
investors include Renewable Energy generation projects, particularly grid-connected Small Hydro, Wind, Biomass and to a smaller extent
Waste-to-Energy and Solar PV projects. He points out that the opportunities for start-ups is more in providing services that feed into
renewable energy generation, off-grid renewable energy and in the green lighting sectors.
Charandeep Kaur of Trilegal points out the key regulatory changes that private equity investors in the solar sector should watch out for. She
also highlights how the newly introduced Renewable Energy Certificates (RECs) mechanism would be changing the economics of
renewable energy projects.
3 © TSJ Media Private Limited. All rights reserved.

Private Equity and M&A Cleantech
What the Data Shows . . .
PE Investments in Cleantech - By Sector - Value*
1%
3%
4%
Wind Energy
6% Power Producers (Multiple Sources)
Solar Energy
8%
42% Hydel Energy
Waste Management
18%
Energy Equipment
Bio Energy
18%
Others
* Jan 04-Apr 10 Source: Venture Intelligence PE Deal Database
PE Investments in Cleantech - By Sector - Volume*
Wind Energy
6%
10%
16% Power Producers (Multiple Sources)
Solar Energy
12% Hydel Energy

19%
Waste Management
9% Energy Equipment
15% Bio Energy

13%
Others
* Jan 04-Apr 10 Source: Venture Intelligence PE Deal Database

PE Investments in Cleantech - By Year
Amount ( US$ M ) No. of Deals
1200 30
1000 25
800 20
US$ Millions
600 15
400 10
200 5
0 0
2004 2005 2006 2007 2008 2009
Source: Venture Intelligence PE Deal Database
PE Investments in Wind Energy
600 6
500 5
400 4
US$ Millions
300 3
200 2
100 1
0 0
2004 2005 2006 2007 2008 2009

PE Investments in Clean Energy (Multiple Sources)
140 4.5
4
120
3.5
100
3
80 2.5
US$ Millions
2
60
1.5
40
1
20 0.5
0
2004 2005 2006 2007 2008 2009
PE Investments in Solar Energy

200 4.5
180 4
160 3.5
140
3
120
US$ Millions
2.5
100
2
80
1.5
60
40 1
20 0.5
0 0
2004 2005 2006 2007 2008 2009

PE Investments in Hydel Energy
60 3.5
50 3
2.5
40
2
US$ Millions
30
1.5
20
1
10 0.5
0 0
2004 2005 2006 2007 2008 2009
PE Investments in Bio Energy
60 2.5
50 2
40
1.5
US$ Millions
30
1
20
0.5
10
0 0
2004 2005 2006 2007 2008 2009
Top PE Investments in Cleantech*
Company Sector Amount (US$M) Investor(s) Date
Suzlon Energy Wind Energy 230 Arcapita Jul-08
WinWind Wind Energy 174 Masdar Sep-08
Morgan Stanley, Credit Suisse, IDFC PE,

Moser Baer Photo Voltaic Solar Energy 150 Sep-08
Nomura Holdings, Others
Greenko Group Multiple 115 Multiple Jan-10

Moser Baer Photo Voltaic Solar Energy 100 Solar Energy Oct-07
Source: Venture Intelligence PE Deal Database; * Jan 2004 to Apr 2010 by Investment Size

M&A in Cleantech
Sectorwise M&A deals in Cleantech
Wind Energy
Waste Management
17%
14% Solar Energy
32%
10% Hydel Energy
Bio Energy
E-waste Management
Multiple
3% 7% 7% 10%
Water Engineering
* Jan 04-Apr 10 Source: Venture Intelligence M&A Deal Database
Yearwise M&A deals in Cleantech
8
8
7
7
6
6
3 3
3
1
0
0
2004 2005 2006 2007 2008 2009

Type of M&A deals in Cleantech
Outbound
23%
77%
Domestic
Inbound
Top M&A Deals in Cleantech

Target Co. Acquirer Sector Amount (US$M) Stake (%) Date
REpower Systems Suzlon Energy Wind Energy 1609 91 Feb-07
Hansen Transmissions Suzlon Energy Wind Energy 565 Mar-06
Honiton Energy Holdings Suzlon Energy Wind Energy 500 Jul-08
(Royal Dutch Shell) Environ Energy Tech Service Solar Energy 100 Nov-07
VA Tech Wabag GmbH VA Tech Wabag India Waste Management 100 Sept-07
Source: Venture Intelligence M&A Deal Database; * Jan 2004 to Apr 2010 by Investment Size

What PE/VC Investors think . . .
Here are the key highlights of a poll conducted among Private Equity & Venture Capital firms for this report. Fund managers from about
50 firms participated in the poll.
Water is top of mind

Investors chose Water Water & Wastewater Engineering, Energy Efficiency, Waste Management & Recycling, Energy Infrastructure,
Pollution Control and Cleantech in Manufacturing/Industrial Environments as among their favourite sectors within the industry.
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How Investors Rated Each Sector

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% Voting Less Than 5 % Voting 5 or More

Can Clean Energy projects sustain without government subsidies?
Yes
No
30.8%
69.2%
A majority of investors believe that clean energy projects cannot sustain without government support. And several of them are concerned
that without self-sustaining economic viability, the adoption rate of alternative energy sources will be significantly slower. Some investors
point out that it is key for banks to understand the risks of alternative energy projects better, in order to complete financial closures for such
projects.
Will consumers in developing countries like India pay a premium for “clean” products?
Yes
No
23.1%
76.9%
Most investors are also clear the value-conscious mass market in India is unlikely to pay substantial premiums for goods/services tagged
“clean” for quite some time to come.

Will investors continue to prefer mature ventures over
start-ups?
Yes
12.8%
No
87.2%
While start-ups providing very unique technology/services will receive investor attention, given the newness of the sector (and the related
risks), PE/VC investors prefer clearly companies with scale and proven management for the more capital intensive segments. As one
investor put it, “Integrated players covering significant portion of the value chain are better investment bets. Start-ups with no real product
innovation are likely to be increasingly marginalised as the market matures.” Plus, larger companies are able to take advantage of tax
benefits better.
Will Indian Clentech Cos. (as against “cross-border” cos.) attract adequate VC investments?
Yes
38.5% No
61.5%
Not surprisingly, the appetite for backing core technology development in India is not very high. The preference is for business model
innovations or services using proven technology procured from overseas. However, some investors point out the high need for local
solutions (to suit conditions specific to India) and the need to control different components of the value chain.
Will we see a rise in investments into carbon credit (CDM) related opportunities in India?
Yes
38.5% No
61.5%
Investors are quite bullish on CDM-related opportunities given rising awareness and India's traditional skills in services and consulting.
Investors participating in the survey cited Execution Risk, Scalability and Limited Exit Options as among the most important challenges in
making investments in the Cleantech sector. Some investors are also concerned about the long payback period, fluctuating input and output
prices and need for government subsidies to achieve attractive returns. The need to sell to government agencies and the lack of a
management pool with relevant experience were also cited as concerns.

Parag Sharma, Associate Director - Transaction Services, KPMG
In India, cleantech mainly focuses on the areas of clean power India is a renewable resource rich country and it also has a large
generation through usage of renewable sources of power or developmental program to back up the deployment of renewable
investment in cleaner technologies and fuels for thermal power. In energy systems. India started its renewable energy program in
recent time there have been considerable instances of visible 1981 with the establishment of Commission for Additional
support to the renewable energy sector, by the state and central Sources of Energy which was later converted into Ministry of Non-
governments in India. conventional Energy Sources in 1992. In fact India is the only
country in the world to have an exclusive ministry for renewable
energy development, the Ministry of New and Renewable Energy
(MNRE).
Renewable Power India

60000
50000 45195
40000
30000
24581
20000 15000
11907
10000
2199
2735
10.2
0
Wind SHP Bio mass+Bagasse Solar and Others
Renewable Power Supply India Potential Renewable Power Supply India Achieved
Figure 2 : Renewable Potential Vs Achievements in India

It is estimated that India's gross renewable energy potential (up to 2032) is around 220 GW. There has been a flurry of activity in the recent
past which has brought the installed renewable capacity to around 10.5 % of the total installed capacity (16.8 GW or renewable compared to
159.39 GW of total installed capacity). Though this is just the tip of the iceberg compared to the estimated potential, it shows that the “clean
revolution” has begun in earnest in India. The figure below shows the estimated growth of renewable capacities in India over the past few
years.
Growth of Renewables over the years (M W)
Year Wind SHP Biomass + Bagasse Solar
2005 - 06 4433 1747 868 2.74
2006 - 07 6315 1905 1112 2.12
2007 - 08 7844 2045 1324 2.12
2008 - 06 10242 2429 1751 2.12
2009 - 10 11907 2735 2199 10.2
Figure 3: Growth of Installed Capacity in Renewable
Policy Level Initiatives
There are various provisions in the Electricity Act that promote the installations of new capacities from renewable sources. It specifies that
generation of electricity for renewable sources would be promoted by the SERCs by providing suitable measures for connectivity with grid
and sale of electricity by any interested party and also by specifying, for mandating the purchase of electricity for such sources, as a
percentage age of the total consumption of electricity in the area of a distribution licensee. It is expected that by the year 2030, more than
20% to 30% of capacity additions would be through renewable sources of energy.
Recently, the CERC has provided a further fillip to the renewable energy industry by providing attractive tariffs, in its tariff order for renewable
sources of energy. And the tariffs shall be valid for a period of 13 years. (This is with the exception of small hydro projects below 5 MW (35
years)and Solar PV and Solar Thermal(25 years).The renewable energy tariff has been designated as a single part Tariff consisting of
components of ROE, Interest on loan capital, Depreciation, Interest on working capital and Operation and maintenance expenses.
Technology Focus
Comparison within various alternative energy sources
Wind Solar (PV) Solar (Thermal) Small Hydro Biomass
Identified
Potential in India
Untapped
Potential
Project Cost
Attractiveness
Government
Incentives
CET Benefits
Key: - Unattractive Source: Global Energy Network Institute, Industry Discussions, KPMG analysis
- Highly attractive

PE Investments in cleantech
The advent of CERC governed tariffs, providing a ROE of 19% , will provide a huge boost to private investments in the renewable power
generation sector in India. Private Equity players and Venture capitalist, would try to exploit the first mover advantage , in order to get the
maximum returns, especially in sectors like the solar sector, which has seen a flurry of activity (on paper) of late, in order to exploit the early
mover advantage.
World over, there has been large investments in cleantech over the past couple of years. Even during recession, cleantech was one of the
preferred sectors for investment.
Deal monthly value (Announced date) Number of deals Number of deals with known values Aggregate deal value (mil USD)
February 2010 21 16 547
January 2010 20 16 235
December 2009 21 16 919
November 2009 18 14 212
October 2009 10 8 117
September 2009 19 15 629
August 2009 14 11 492
July 2009 16 13 285
June 2009 15 10 151
May 2009 19 16 2,636
April 2009 15 9 151
March 2009 11 9 791
February 2009 14 8 149
January 2009 10 8 572
Total 223 169 7,887
Zeyphyr cleantech report , February 2010
PE deals in Cleantech anounced over the past year

Sum of Total
250
200
150
Total
100
50
0
Australia China Germany India Indonesia Russian United United States
Federation Kingdom of America
Country (target)
Source : Zeyphyr cleantech report , February 2010

India-based IDFC Private Equity holds the distinction of being the
largest and most active private equity firm focused on
infrastructure and the cleantech space in India, with a total of Rs
60 billion ($1.3 billion) under management. Cleantech companies
within IDFC Private Equity's portfolio include Doshion Water,
Moser Baer Photovoltaic, Green Infra and Emergent Ventures Demand supply of gap in raw silicon market seems to be
India. decreasing world over, driving down costs of solar modules.
Key Issues for PE Large tracts of land available in India in solar radiation rich areas
for low costs.
There are a few considerations that PE firms usually take into More efficient technologies coming into the market on a regular
account so that they are comfortable with the sector and industry basis.
and the target before they invest. These are briefly explained as
follows Many small medium developers have got allotments under
various schemes, and it would be relatively simpler to target these
Return on Equity : The normative returns for all renewable for entry into the solar market.
projects as per CERC guidelines is specified as 19% pre tax for
the first 20 years and 24% thereafter. And since the tariffs are fixed However, the only matter of concern is the lack of track record of
in most cases, efficiencies in capital costs and operational most of these companies in development and operation of solar
paramters can lead to a lot higher returns as compared to the power projects.
normative returns.
Scalability: Most PE firms prefer too look at projects/targets with a Conclusion

100MW+ portfolio. This is primarily in order to achieve the
The increasing international pressure on reduction of emissions
economies of scale during capex and opex and also substantial
has opened up the renewable market space in India. India has a
returns on investment.
large cleantech potential especially in the generation of clean
Regulatory Intervention: The renewable power market, even energy on an immediate basis. It has already initiated large
though regulated under the current scenario has shown programs backed by incentives, sustainable tariffs and policy
substantial tariffs. Also competitive bidding for renewable project level encouragement.
tariffs seems to be a long way away, thereby justifying
In fact the growth of the success story of wind in India is credited to
investments under the current scenario.
the accelerated depreciation incentive, which has helped India to
be one of the top players of wind turbine manufacturers and
Why Solar is a good option for PE installation of wind farms in the world.
The solar power sector seems to be a good option for a lot of new The JNNSM and the SIPS( solar investment promotion scheme),
entrants especially for PE funds since, is primarily targeted to revitalize the solar industry in India. The
substantial capex subsidies for manufacturing and regulated
Lots of activity in the solar sector, however not too much actual
tariffs for solar power has evinced interest from even the biggest
execution on the ground.
players in the other sectors, including Reliance Industries Limited,
Large targets for national level capacity addition backed by who plan to capture the value chain in a “sand to power” initiative.
sustainable tariffs for solar power. The large solar capacity addition plans by centre and state
governments ensure that there is a lot to play for and for a lot of
players.
About the Author
Parag has worked in the power sector including renewable

power for about 13 years. He has assisted Alstom and Vestas
for wind assessment studies and helped them on their entry
strategy in India.
Parag has also worked in the Mergers and Acquisition space

in the renewable power sector and has led many due
diligence mandates for Private Equity and corporate clients. Contact:
Parag has worked in preparing investor deck for two
corporates in the advanced stages of setting up Solar Parag Sharma
Generation projects. Associate Director, Transaction Services
E: paragsharma@kpmg.com

Shivani Bhasin Sachdeva, CEO, India Alternatives
Thanks to a combination of factors including oil spill in Gulf of From a private equity perspective, there is
Mexico, volcanic eruption in Iceland, starving polar bears and the
first completely solar powered village in India, climate change has
good news and bad news.
gone from being dull and marginal to being “cool and core”.
The good news is that the market is huge and growing fast. In
Strong sustainable drivers have created a large and fast growing
India, the installed generation capacity from renewable energy
global clean energy market that attracted USD 148 Billion in
has increased over ten-fold during the last decade to 17,000 MW
private equity investments in 2007 and the trend has been
or 11.0% of total installed capacity, up from 8% in 2007. The share
upwards ever since. There are numerous fundamental drivers
will continue to grow steadily with renewable energy expected to
contributing to the growth of the Green Infrastructure industry
contribute as high as 38% by 2050. On a more immediate basis it
globally and in India:
means an investment requirement of USD 20 Billion by next five
1. Volatile oil and gas prices: India has a low availability of oil and years. The growth in renewable energy is supported by strong
gas making it vulnerable to volatile crude oil prices. Also, the potential in terms of availability of renewable energy sources.
reserves of conventional fuel are getting more difficult to extract as According to CRISIL, India has a potential of 48,561 MW of
exploration moves to tougher terrains. installed capacity of wind power, 14,305 MW for small hydropower
and 24,581 MW of biomass. Based on these figures, as of 2009,
2. Growing need for energy security: 75% of India's current need India has realized approximately 22.4% of its wind power
for fossil fuels is met by imports, creating a dependence on other potential, 17.6% of its small hydropower potential and 8.6% of its
countries. biomass power potential. We have a long way to go.
3. Resource availability: Given India's proximity to the equatorial An interesting model that is now gaining popularity with Private
belt, over 5000 trillion kWh per annum of solar radiation falls on the Equity Funds is to invest in companies who are aggregators of
country making it a virtual “hotbed” for solar energy. renewable energy assets in India. Private Equity Funds are
looking to partner with these companies to create a portfolio of
4. Favorable government policies: India's power deficit of 10% is assets including wind, small hydro and biomass.
a real impediment to its GDP growth and the Government
understands this. The Central Electricity Regulatory
Commission's (CERC) mandate to all state power utilities to
purchase at least 5% of power from renewable energy sources,
increasing to 15% by 2020 is set to give a major thrust to this
sector.

The Green Infrastructure market is much bigger than just clean
energy. It includes other sectors such as Water Solutions, Waste
Management, and Energy Efficiency. The water industry is
poised to grow with overall industrial growth (3% of the capex on
thermal power plants is on water) as well as the emergence of
BOOT models in the municipal segment. Companies that will
benefit from the increase in demand include water purification Now for the bad news. Some aspects of Cleantech are still reliant
companies that provide sea water desalination, rainwater on government subsidies. For example, while the levelized cost
harvesting, watershed management, and sewage water of solar power per watt has been coming down dramatically
management. Additionally, total water solutions providers such (globally at 18-22 cents/kWh) it is still not at grid parity levels of
as water metering companies, transmission and distribution between 10 and 15 cents/kWh. Globally, solar markets have
companies as well as those focused on billing and collection will grown due to feed in tariff subsidies. Germany was a pioneer for
benefit. the solar market -not because the Germans love basking in the
sun - it is because government policies require utilities to pay
Greater urbanization and lack of adequate Government above market prices for solar generated electricity. German
machinery is driving demand for private players in Waste consumers that set up solar panels on their roof and generated
Management. As much as 42 million tons of waste is generated excess electricity could sell back to the government and make
per annum in India with a potential for recycling. Key growth attractive IRR's. In the wake of the global financial crisis, this
areas include waste collection and composting, dumpsite market was impacted as the Government started pulling back on
management, and medical waste management. subsidies.
Energy efficiency is being driven by the Government's mission to Another concern from a private equity perspective is that the
deliver 10,000 MW power savings by 2012. Key growth areas gestation period of Cleantech opportunities are generally higher.
include energy efficient buildings, technologies for energy Small hydro projects which generate a higher IRR compared to
intensive industries, lighting and heating. other renewable assets take two to three years to start operation
and are dependent on clearances by Government. Private
The other piece of good news is that the Green Infrastructure
Equity Funds usually invest for a period of four to five years, during
sector provides non linear growth opportunities which can result in
which the full potential of some of these investments may not be
rapid scalability of businesses in relatively short order. For
harnessed.
example, the “killer app” in solar electricity generation is to move
from individual applications such as streetlights and panels on Other challenges include the lack of depth in debt markets and the
rooftops to an alternative to traditional electricity by solar power lack of talent in the sector. Indian banks look for balance sheet
feeding into the grid directly. funding because of which a lot of growing companies are unable
to attract project based funding, driving up the cost of debt. The
There are several myths that should be Government is, however, cognizant of these challenges and has
debunked regarding PE investments in been coming up with reforms to overcome these challenges. The
Government has recently relaxed the External Commercial
Cleantech or Green Infrastructure: Borrowing (“ECB”) norms, which has helped companies gain
access to cheaper loans. Additionally, Cleantech has started
Myth #1: Cleantech is a high risk technology type investment gaining popularity among young people only recently and there is
a dearth of talent in this sector. This is posing to be a challenge as
In fact, Green Infrastructure in India is much more about
companies need to scale and rely on project management skills in
manufacturing and infrastructure development, than about
this sector.
making pure play technology bets. In fact, there are several well
established technologies (in addition to emerging technologies) Overall, the positives outweigh the negatives in this sector and for
across the value chain in renewable energies. This makes it entrepreneurial companies that are willing to work hard in building
plausible for PE investors to go in without taking a risk that a businesses in this sector (and for private equity investors that will
particular technology will become obsolete. back them) there are several opportunities to generate immense
wealth, in addition to solving India's energy needs.
Myth #2: Green Infrastructure is only about heavy capex and
low ROE businesses
There is a significant scope for services type companies in the

Green Infrastructure space. An investment I made while at IDFC
PE was in Doshion, a water solutions provider- a company that
provides end to end solutions in water management. As
described earlier, there is an emergence of a slew of interesting
companies in the “energy efficiency” sector which are low capex
and high ROE businesses. Additionally, projects in cleantech are
often subsidized via government grants which reduce the capex
burden for private investors.
Sources: MNRE, KPMG Renewable energy report, 2009, CRISIL, Central Electricity Authority; Sunpower Paper: The Drivers of
the Levelized Cost of electricity for Utility-Scale Photovoltaics, Industry Sources

India Alternatives is a Private Equity fund targeting
investments of Rs. 25-75 Cr each in the mid-growth segment
in India. The Fund will invest in rapidly growing companies that
have proven business fundamentals and require expansion
capital.
The focus sectors of the Fund are categorized into the

following three investment themes -
Green Infrastructure: Water solutions, Waste management,

Energy efficiency and Renewable energy sources
Soft Infrastructure: Investment areas include Education,

Healthcare, Infrastructure ancillaries and Logistics
India Alternatives Domestic Consumption: Investment areas include Food

processing, Media & Entertainment and Consumer
goods/lifestyle
The India Alternatives team comprises of proven

entrepreneurs, investment professionals and industry experts
who have deep domain knowledge and a demonstrated track
record of leading companies to exponential growth.
About the Author: Shivani Bhasin Sachdeva, CEO

Shivani has over 12 years of transaction experience in USA Previously, Shivani was with Lightyear Capital, a private
and India, with 10 years of private equity experience. Shivani equity fund based in New York, where she was responsible for
is the CEO of India Alternatives, a private equity fund focused evaluating middle-market buyouts, growth equity and venture
on the mid growth stage. India Alternatives will invest in investment opportunities as well as monitoring select portfolio
Green Infrastructure (including renewable energy, water, companies in the financial services sector. Prior to joining
waste management, and energy efficiency). Other Lightyear, Shivani was at the private equity arm of General
investment themes of India Alternatives include Soft Electric. Shivani started her career at Credit Suisse First
Infrastructure and Domestic Consumption. Boston's Investment Banking Division.
Previously, Shivani was a Principal at IDFC Private Equity Shivani received an MBA from the Wharton School,
where she was responsible for deal sourcing, execution and University of Pennsylvania, and a BA in Economics from
monitoring companies in the growing infrastructure sector in Mount Holyoke College (Phi-Beta-Kappa, Magna Cum
India. Shivani has made investments in and managed Laude, Sarah Williston Scholar).
portfolio companies in the 'Green Infrastructure' space
including Doshion Water Solutions and Moser Baer
Photovoltaic. She has also led transactions and managed
investments in various other sectors including telecom,
healthcare and hospitality. Shivani was on the board of Contact: Shivani Bhasin Sachdeva
HealthCare Global, a company focused on providing best in
class oncology care on a pan India basis. CEO
E: shivani.bhasin@india-alt.com
T: +91 22 26432601

Cleantech: A growth catalyst in Energy
& Environment sector
Cleantech is a broad category that encompasses technologies, approaches and business models in the energy and environment arena. It
has emerged as a strong catalyst and growth driver for entrepreneurs to solve challenging energy & environmental issues and for investors
to harness the inherent growth for significant returns. Cipher Capital is witnessing continued cleantech-driven momentum in sub-sectors
such as power generation/T&D, renewable energy (hydro, wind, solar, biomass / biofuel), water treatment and waste management.
“Half the world lives in areas with a water deficit. The World Bank predicts that 60% of India's aquifers
will be in a critical condition by 2025. However, technology advances and cost reduction, in industrial &
municipal wastewater treatment and reuse, make it possible to provide clean water for everyone, as is
currently done in Singapore. Seawater and brackish water desalination can bring additional fresh
water to coastal areas. These types of innovative solutions present a unique growth opportunity for
companies in the water treatment space.”
Kris Kshetry
Chairman, UEM Group
“India represents a significant opportunity in Solar power. Given the high insolation, continuing system
cost reduction and increased Government support, solar power in India is reaching an inflection point.
We look forward to accelerated investment in solar power generation and PV manufacturing.”
Chet Farris
CEO, Stion Corp
“Wind energy is one of the most cost effective, proven and environment friendly approaches to
renewable power generation. By leveraging innovative technologies one can harness more of this
natural resource to meet India's growing power demand while reducing our dependence on imported
and fossil fuels.”
R. Sundaresh
Joint MD, Regen Powertech
Specialists in Private Equity & Strategic Transactions
Cipher Capital is a specialist investment bank Contact: Prashant Maniar

focused on international private equity & strategic E: prashant@cipher.in
transactions, with offices in Mumbai, New Delhi, and M: +91 99872 63480 (India)
California.
M: +1 408 202 7381 (USA)
Abhay Anand
E: abhay@cipher.in
M: +91 98205 35140
Address: A122, Gokul Arcade, Sahar Road, Vile Parle (E), Mumbai - 400 057 Tel: +91-22 6777 4777 Fax: +91-22 6777 4778
www.cipher.in

Olympus Capital Holdings Asia is a leading independent middle market private equity firm.
Since its establishment in 1997, Olympus Capital has invested $1.3 billion on behalf of its
investors in 30 portfolio companies throughout Asia, including India, China, Japan and South
Korea. Target industries include environmental services/alternative energy, agribusiness/food,
business services, financial services, manufacturing and natural resources. Olympus Capital's
global investor base includes leading pension funds, financial institutions, endowments and
family offices from North America, Asia, Europe and the Middle East.
Olympus Capital has a team of experienced investment professionals located in offices in New
Delhi, Hong Kong, New York, Seoul, Shanghai and Tokyo. This extensive regional infrastructure
gives the firm a decided advantage in identifying, structuring, monitoring and adding value to its
investments.
Olympus Capital began investing in the environmental services/alternative energy sector in

2005 with investments in waste, renewables and carbon. Olympus Capital raised a fund focused
on the environmental services and alternative energy sectors, with a dedicated team of
investment professionals and operating executives. This fund, Asia Environmental Partners,
closed in 2009 with a raise of $250 million.
Contact:
Unit # 407, 4th Floor, Tower B, Signature Towers,
South City - I, Gurgaon (New Delhi) - 122 002, India
Tel: (91) 124-451-7000 Fax: (91) 124-451-7015
Email: information@olympuscap.com

Rama Bethmangalkar Siddhartha Das
Investment Manager, Ventureast General Partner, Ventureast
1
Did you know that Solar Photovoltaic cell was invented in 1954 at Myth 1:
Bell Laboratories and Solar thermal collectors have been around
for more than 300 years now? Every new decade brings renewed Solar energy is too expensive and cannot compete with
promise that man will finally be able to crack the code to tap into conventional sources of power on a cost per kilowatt-hour basis.
the nearly infinite source of energy from our beloved Star the Sun. The reality is: technology is rapidly bringing down the cost of Solar.
If man has been at it for so long surely the technology must hold a For example, as Figure 1 depicts, the cost per watt of Solar PV
lot of promise and as a corollary, the technology must surely have module was $27 in 1980 compared to less than $3 (and falling..) in
its fair share of myths, hype and realities in some mix. 2009.
Myths about Solar Energy

Of the several misconceptions about Solar, we choose to highlight
the following two, the first one used by critics of Solar energy and
the second used by the advocates to further their respective
opinions.
1. Photovoltaic Effect Electricity is produced when sunlight falls directly on certain materials

Solar PV Global Productions and Cost per Watt
MW Production Cost per Watt
8,000 $30
$25
6,000
Solar PV Pricing
$20
4,000 PV Production $15
$10
2,000
$5
0 $0
01
02
80
00
04
86
96
97
03
06
07
98
99
08
05
Source Solar Buzz, Company reports, Green Econometrics research
Figure 1: Declining cost of Solar Photovoltaic Modules
On the flip side, conventional energy costs are rising due to Where can we apply Solar technologies
inevitable depletion, higher logistics cost and increased emission
norms. While utilities in India claim that it costs Rs. 2.00 to Rs. 2.50
today?
to produce a unit (1 Kilowatt-hour) of electricity through coal, the
real cost may be twice as much factoring in transmission, At the current costs, Solar power is economically viable without
distribution losses and current high costs of coal, which are not subsidies in many off-grid applications such as powering lights
2
being passed on to the consumers . There are many applications and small devices, water and space heating (solar thermal), and in
be it - powering remote villages, cell phone towers, or street larger configurations - powering remote cell phone towers which
lighting where solar is the least expensive source of power even currently use diesel electricity that costs approx. Rs. 15 Rs. 18 per
today at current costs! Kwh. Solar lanterns are a perfect replacement for kerosene lamps
and is proven to offer a payback period in 12-18 months. Solar
Myth 2: thermal based water heating - prevalent in many parts of the world
and quite common in southern India, offers a 3-4 year payback
period. As far as utility scale power plants are concerned, they are
Solar energy is ideal for addressing any application requirements. 3
suited to augment the peak load . Figure 2 shows that electricity is
This claim is flawed since a Solar power plant can produce energy
being traded at increasingly higher prices on the energy exchange
only during day times and supplying energy at night times through
in India. While only 5-10% of the overall energy is actually traded,
storage techniques is prohibitively expensive on a utility scale
majority of the trading is involves peak load demand. As can be
application (> 1MW).
seen, a new price band of Rs. 8-12 per Kwh opened up in 2007-08.
2. The Tamil Nadu Govt. recently had to back track planned hike in electricity rates
3. Peak load: situation when a utility experiences peak power demand. It occurs for a few hours each day when peak demands
from residential, agricultural, and industrial customers overlap.

Evolution of Traded Energy Prices
100000
10000
1000
Million Units
100
10
1
2004-2005 2005-2006 2006 -2007 2007-2008
Year
0-2 2-4 4-6 6-8 8 - 10 10 - 12 Rs. per Kwh
Figure 2: Electricity price bands traded in India
Financing Solar Power 2010 and Beyond
Compare the cost of acquiring a kerosene lamp at Rs. 150 to In many ways, 2009 could be considered as the end of the
the cost of acquiring a decent solar lantern at Rs. 1,500, even beginning for Solar. The last decade saw huge technology
though the latter investment pays back in 12-18 months and leaps, manufacturing capacity additions, price corrections
becomes virtually free from then on. Similarly, higher initial (within a span one year an under-supply of panels became a
capital investment is involved in other solar product from huge over-supply), industry consolidations, dozens of
lanterns, fans to solar thermal water heaters, power packs governments announcing favorable policies. The Jawaharlal
and utility scale power plants. Availability of credit at Nehru National Solar Mission not only spells out pragmatic
attractive rates is a necessary condition for economic policies but also lays out a clear implementation strategy with
viability of any Solar application. Indeed, credit availability (or right kind of responsibility and accountability already in
lack of it) in 2008 was the single biggest reason for arresting place. Globally and in India, the stage is set for Solar
the phenomenal growth in global demand for solar especially entrepreneurs to develop the market by enlisting customers
utility scale projects. and project financiers. The next decade will see rapid
deployments in a variety of solar applications to take
We believe that market for Solar in India will kick start only advantage of favorable subsidy regimes.
when business models package the financing aspect as
seamlessly as we are accustomed to when buying a new car. The hype about Solar power is that Government subsidies
Take for example the case of Intelizon, a Ventureast funded are sufficient to ensure the long-term viability of solar. The
company that addresses the power needs of rural homes hard reality of declining subsidies is currently being played
using solar driven technologies. Kushant Uppal, CEO of out in some of the European markets such as Spain and
Intelizon, with a PhD in Optics, has done significant work to Germany. It would be naïve to assume demand will be strong
lower the cost of manufacturing and ruggedize the product. It even without subsidies or to assume that governments will
was not until Kushant tied up the financing piece with micro- continue favorable policies indefinitely.
finance institutions, banks and distributors that he saw
higher levels of penetration with sales jumping by 3 to 5 The Solar industry has to push the envelope on price/Kwh,
times! Solar entrepreneurs and companies in India need to technology challenges and introduce innovative business
work more on selling the proposition about this emerging models to achieve economic viability without any
sector to potential project financiers. government subsidies. Given the quality of entrepreneurial
activity and the interest from venture capital and private
equity investors world over, we believe this challenge will be
easily met by 2020.

Water water everywhere but not a drop to drink?
As implied by Figure 1, this famous phrase from The Rime of the Ancient Mariner is more relevant to us in India today than perhaps
for any mariner ever.
To overcome these problems, researchers at Richcore
Lifesciences (a Bangalore-based company who received
funding from Ventureast in 2008) are focused on the
environmental applications of enzymes that have been
isolated from their parent organisms. Enzymatic systems fall
between the two traditional categories of chemical and
biological processes, since they involve chemical reactions
based on the action of biological catalysts. Richcore's
enzymatic solutions are cost effective, 100% eco-friendly
and increase efficiency of current effluent treatment
systems.
India
Innovation in business model is equally important if not more
than technological innovation. Organizations such Naandi,
Global Water Supply WaterHealth Inc. etc. offer products using different water
vs.
Global Population purification technologies. However they did not have to
Source: World Bank, UNESCO International Health Program, Global Water Intelligence,
specifically design a home purification system for the large
Goldman Sachs report semi-urban/rural market, but were able to engage local
communities to create a “pay per use” model for a
Figure 1: Water Scarcity in India. community-level water purification system. Almost 80% of
households signed up in a village where no one had paid for
water in the past.
With 1.1 billion people lacking access to safe and potable
water around the world, water quality management and Problems of such magnitude and criticality as the current
waste water treatment are priorities especially for the water crisis can be more effectively tackled through public-
developing world. India - where the per-capita availability of private partnerships (PPP). The opportunities are wide
fresh water (1,678 cu m/year in 2006) is already below the ranging and a focused effort could create a large pool of
international benchmark (1,700 cu m/year) has an urgent opportunities. Venture capital and private equity can play an
need for investments in water quality improvements, important role by investing in innovative technologies which
including in environmentally sound agriculture to reduce can drive down the cost of water treatment, making them
runoff into rivers, and in urban wastewater treatment. competitive on price and performance for large scale
implementation.
As per the Central Pollution Control Board, only 21% of the
total wastewater generated is currently being treated in
India. Wastewater generated from industries generally
contains particulates, dissolved solids, chemicals and
biodegradable organic matter. To reduce the pollutant levels
in effluents and recover water in usable form, effluent
treatment plants employ numerous physical, chemical and
biological approaches. However these approaches have
limitations in terms of cost, hazardous by-product formation,
and high energy requirement.

We have invested in more than 60 entrepreneurs across
diverse sectors. We are a stage agnostic fund manager but
with a penchant for venture style investing. Our funds are
focused on fundamental needs leading to high impact, such
Ventur ast as funds that focus on meeting health care needs of the
market, irrespective of whether the solution is driven by
biotechnology/pharmacology. Or, our technology fund that is
focused on the needs of semi-urban rural markets and the
needs of small/medium enterprises (SMEs), irrespective of
whether the solution is derived from mobile or power or
financial inclusion technologies.
Ventureast is an entrepreneurial fund manager with more Our team comes from diverse backgrounds with
than a dozen years of investing experience in India. We are professional, entrepreneurial and financial expertise. We are
now onto our third generation of funds with close to $300 passionate about our portfolio companies and extremely
million under management. hands-on.
For more please visit: http://www.ventureast.net
About the Authors:
Rama Bethmangalkar, Investment Manager Siddhartha Das, General Partner

Rama works on technology and technology assisted Siddhartha Das is a General Partner at VenturEast Fund
solutions for small and medium enterprises, and semi-urban since 2006. Prior to that, he spent 19 years at Intel
& rural markets. His areas of interest include technology, Corporation in engineering, business development, and
telecommunications, outsourcing, financial services, and strategic investing. He headed Intel Capital-South Asia from
alternative energy sectors. Rama comes from the high tech 2000-2003 and established Intel Capital as the "leading
industry with over 8 years of experience in marketing, technology investor" with more than 15 investments in
product management and R&D. telecom, software services and consumer internet. He
started out his career at Intel USA in corporate research and
Prior to joining Ventureast, Rama was a Sr. Product Manager product development, and managed groups which delivered
at Sun Microsystems, in California USA where he played a on advanced technologies for microprocessors. He has
lead role in marketing and product management of Sun's been granted 5 United States patents for his work on
$100M high availability and systems management business. microprocessor and optical technologies. He has been an
Rama designed and implemented a highly optimized data Executive member of the Manufacturers Association of
store for 3G wireless systems. He holds 2 US patents for Information Technology (MAIT) and was a member-
work in the area of high availability software architectures. representative of the American Chamber of Commerce
(AMCHAM) in India. He is a Charter Member of the
Rama is an avid golfer and a North Indian classical music Bangalore chapter of The Indus Entrepreneurs (TiE), a
aficionado. global advisory body for entrepreneurship. He holds a
Bachelor of Technology degree with distinction from the
Rama received an MBA from Cornell University, a Masters in
Indian Institute of Technology, New Delhi and a PhD from
Computer Science from the University of Rhode Island and
Cornell University.
Bachelors in Computer Science from the University of
Mysore, India.

Kalpana Jain Sandeep Negi
Senior Director, Deloitte Senior Manager, Deloitte
The growing power of solar energy Though India has committed to reduce emissions, it needs to
focus on its economic development as well. While the Indian
In recent years, the impact of climate change and volatile oil prices economy is the fourth largest in the world with a GDP at US$ 1.28
have paved the way for clean technologies, including wind trillion in Purchasing Power Parity terms, in terms of GDP per
energy, solar energy and energy efficiency, to become the next capita, India ranks 128.It has a per capita GDP of USD 3,109 as it
wave that will drive the global economy and subsequently houses 17% of the world population. Some other pertinent
become a way of life. characteristics about India are:
The Copenhagen Accord, drafted by the US, China, India, Brazil 456 million citizens below US$ 1.25 in 2005 (in PPP terms)
and South Africa on 18 December 2009 and signed by 138
countries, takes note that climate change is one of the greatest 400 million citizens still lack access to electricity
challenges today and that actions need to be taken to keep any
Low per capita consumption of electricity of 610 Kwh
increase in temperature to below 2° celsius by 2050 from the mid-
19 century levels. To attain this, the carbon dioxide (CO2) 10-12% peak power deficit
equivalent concentration needs to be stabilised at 445 to 490
ppm. This demands that CO2 should reach its peak emission by 2/3rd household rely on biomass based fuel for cooking
2015, and start declining from there on.
Keeping all this in mind, the Indian government is targeting a 9%
This provides a strong rationale for moving to a “low carbon growth over an extended period with a focus on inclusive growth.
economy”. The European Union (EU) and the US are This, however, is putting pressure on the infrastructure backbone
implementing a binding legislation on emission cut while India and of the country, especially the power sector. Hence, the Ministry of
China have committed reduction in energy intensity in line with the Power has defined ensuring “sufficient power for 8% growth” as a
need to address the climate change issue, while focusing on key objective.
growth of their economy and development of its citizens.
Having said that, most of the capacity addition in the power sector
India has committed targeting an emission intensity decline of 20- will primarily be coal-based given the limited access and
25% by 2020 as compared to 2005 levels. It has declared that its availability of cleaner sources such as gas and nuclear. As a
per capita emissions will never exceed that of the developed result, the carbon intensity of power produced is projected to
countries, even after accounting aggressive emission reduction remain high. While with the addition of 332 GW of capacity by
targets of such countries. 2022, the per capita emission will remain at 3.5MT of CO2 e; by
2030 the GHG emission is expected to double from the current
levels at 2.1MT of CO2 e, increasing the energy intensity of the
country.

In order to manage the economic growth even while addressing
the climate change issues, the government has launched the
Jawaharlal Nehru National Solar Mission, under the National
Action Plan on Climate Change (NAPCC). This sets out
aggressive plans for deploying solar power generating plants as
well as nurturing manufacturing capabilities, and also initiating
research and development for reducing cost of generation.
As mentioned, India has its own strategic and economic reason to

focus on renewable energy. These include :
To encash upon the vast renewable resources including solar,

hydro, wind and biomass available within the country
To address energy security by reducing its dependence on Source: New Energy Finance
imported feedstock Majority of the investment in renewable sector is recorded in
Europe and North America, which comprises 67% of the total
To control rising carbon emission from new power generating investment, followed by Asia on account of investment in China
capacities and India.
To meet the “Power for All by 2012” target by reaching remote Also, of the total investment in sustainable energy, investment in
locations, which are difficult or economically unviable to reach the solar sector has increased by 49% to take the sector to the
through distributed systems second highest position in terms of attracting investment in 2008.
To improve the quality of life and arrest increasing social cost
To utilise the opportunity to become a manufacturing and R&D

hub for solar power globally
To reduce the capital cost of solar power
While the share of renewable sources is increasing globally in

new power capacities being created, all sources of renewable
power - wind, small hydro and biomass, capacity growth is
significantly limited by the availability of feedstock for the
generating unit. In case of solar power the limitation is only the
ability to envision more cost effective means of harnessing an
almost unlimited source of energy.
Achieved as on 31
Source of RE Potential (MW)
March 2010 (MW)
Wind power 45,000 11,807
Small hydro(upto 25 MW) 15,000 2,735.42
Biomass Power 16,000 865.60

The investment in solar sector was driven by policy interventions
Cogeneration
(including bagasse cogen)
3,500 1,334.03 in EU through attractive Feed-in-Tariffs (FIT) which is now being
implemented in other geographies like the US, China and India.
Biomass Gasifier - 122.14 But these FIT have been reduced / withhold due to economic
recession.
Solar Power 600 TW 10.28
The current global Photo Voltaic (PV) deployment in 2009
Waste to Energy Programme 2,700 64.96
reached 23GW, an annual growth of 64% over last 10 years. While
the key driving countries were Europe (particularly Germany and
Total 82,200 16,939.43
Spain) and Japan in the past, going forward new geographies
Source: MNRE (such as USA, India and China) are expected to pick-up.
Opportunities As per New Energy Finance, over 100 GW of PV is projected to be

deployed by 2014 globally under the policy driven scenario, with
With the global imperative arising from sustainable development, EU housing 51% of this additional deployment followed by the US
investments in sustainable energy reached US$ 155 billion in at 16%, while India and China comprising of 4% and 7% of
2008, a rise of 440% from 2002 levels. With the aim of limiting
additional deployment. These additional capacities are estimated
peaking of CO2 emissions by 2015, it is estimated that an annual
investment of US$ 500 billion will be needed by 2020. This to require about US$ 360 billion of asset financing.
provides a tremendous investment opportunity in the renewable
sector across the investment category research, India has charted an aggressive target of deploying 20 GW of
commercialization, asset financing and mergers and acquisitions. solar power by 2022 through the launch of its Jawaharlal Nehru
National Solar Mission.

In order to achieve 20 GW of solar energy capacity by 2022,
Government has initiated multi-fold strategy increasing the
attractiveness of solar energy in India:
Phase Year Cumulative Capacity (MW)

Concept of “polluter pays” - The statement of Finance Minister
of India in its 2010 Budget Speech on the principal of a “polluter
I 2010 - 13 1,100 pays” signals India's commitment towards clean energy and cost
attached to other feedstock based energy generation.
II 2013 - 17 4,000
Clean technology development fund - National Clean Energy
Fund setup by the Government by levying a cess of Rs.50 per
III 2017 - 22 20,000
tonne on coal, both domestic and imported, is expected to receive
Rs. 3,000 crores of corpus annually. The fund is to be utilised for
Demand generation - Central Electricity Regulatory Commission funding research and innovative projects in clean energy
has introduced mandatory Renewable Purchase Obligation technology.
which requires State Electricity Boards to purchase atleast 5% of
its total power purchase from renewable sources in 2009-10 The target set by the Solar Mission is expected to provide an
increasing to 15% by 2020. In addition, Solar specific RPO is investment opportunity of over US$ 50 billion over the mission
proposed at 0.25% in 2009-10 to be increased to 3% by 2022. duration in the Indian market alone.
The introduction of Renewable Exchange Certificates is expected The size of the Indian opportunity may be judged by expected PV
to enable utilities from green energy-deficient States to buy such deployment in domestic market which provides an opportunity
Certificates from renewable energy utilities or distribution utilities valued at Rs. 35,000 crores of revenue generation and an
to offset their lag. This is expected to encourage States with lesser investment opportunity of Rs. 45,000 crores. If one were to
renewable energy generation sources to commit to mandate assume the balance 50% of the solar power deployment will be
Renewable Purchase Obligations. through solar thermal technology, the total revenue generation
opportunity is estimated at Rs 50,000 crores (over US$ 11 billion)
Visibility of profitability - The tariff rate for solar power
suggested by Central Electricity Regulatory Commission aims at In addition, just by maintaining its current capacity share of 10% in
providing an attractive pre-tax return on equity of 19% during first the expanding global deployment market (addition of 101 GW by
10 years and 24% thereafter. 2014), there is an additional investment opportunity of Rs. 40,000
crores (about US$ 9 billion) for tapping the export market from
India.
Estimated Revenue Potential Investment Opportunity

Capacity (Rs. Crores/Year) (Rs. Crores)
Installation 900
BoS 1,100
Inverter 2,100 MW/Yr 2,100
Thinfilm 525 MW/Yr 2,700 8,000
Modules 1,575 MW/Yr 3,700 3,000
Cells 3,150 MW/Yr 2,100 8,000
Ingots/Wafers 9,500 MW/Yr 1,300 21,000
Polysilicon 9,500 MT/Yr 1,100 5,200
PV Solar Plan* 10GW 19,100
- 5,000 10,000 15,000 20,000 - 10,000 20,000
Source: Industry Research, Deloitte Analysis

This opportunity opens doors for new entrants in the deficit power Other related industries
sector, which is currently dominated by Government companies With increasing market for solar PV and solar thermal power
or companies having the ability to secure feedstock. generation, there are other allied interests which are expected to
benefit from this growth. These industries include glass, backup
Manufacturing power, boilers, turbine and inverter.
India's current capacity of 1000 MW of module and about 500 MW
of cell production is sufficient to cater to the initial years' projected Challenges
demand driven by Government policy. However, with current
manufacturing capacity intending to keep a balance between With the large investment opportunity expected to be generated
export and domestic demand, there is significant investment by the solar sector, it will not be free of challenges. The solar
opportunity for expansion as well as for new entrants. An sector is still in its infancy and faces challenges that are common
important point being that, with cell manufacturing and thin film in emerging sectors. The players across the solar value chain are
plant having longer gestation/stabilization periods, the operating in a dynamic environment where-in key assumptions
opportunity for expected demand for 2013 onwards needs to be keep changing including reducing subsidies, decreasing
importance of incumbents and attractiveness of silicon-wafer-
initiated in 2010/2011.
based technology. This dynamic state in a fast developing and
growing sector is embedded with various challenges. Some of
Technology companies
these challenges are global in nature given the stage and nature
Given the high cost of solar power generation (Rs. 14/kWh),
of industry while some are specific to India.
development in technology is key to reduce setup cost by
increasing efficiency, increasing yield (of cell/film line), reducing Technology landscape
conversion cost and reducing input cost (silicon in most cases). New technologies like Cadmium telluride / Copper indium gallium
While crystalline silicon dominates the PV deployment market, its selenide thin film, concentrated solar power and solar thermal are
module are nearly approaching theoretical efficiency of 30% promising next phase of growth in solar energy by increasing
resulting in increasing investment in new emerging technologies efficiency and reducing cost of generation. The fast-paced
like amorphous silicon based thin film, Cadmium telluride / Copper development in the technology space, in terms of modification in
indium gallium selenide thin film etc. This is provides an existing technologies and entry of new technologies, increases
opportunity to firms working in development of technologies to the challenge for entrepreneurs, venturing into the manufacturing
part of the solar value chain, in selecting promising technology for
work on new emerging solar technology promising to provide
their proposed investments in manufacturing segment of solar
economical cost of solar power. value chain.
The increasing attractiveness of solar technology development High cost
financing in the eyes of financers can be observed in a survey on Given the still early stage of development, solar power generation
incubators conducted by New Energy Finance in 2008. As per the cost remains high as compared to electricity produced from wind
survey there was about 189 incubators working on supporting or fossil-fueled power plants. This makes the industry heavily
clean energy businesses in the earliest stages of development dependent upon government incentives/subsidies till it reaches
with most of the incubators (about 46%) based out of EMEA grid parity.
region. It's also important to note that the highest number of
incubated companies were in solar sector at 73 (21% of total 338 Policy uncertainty
incubated companies). Given the high cost of generation, as compared to thermal and
wind, policy support is crucial to build capability in the solar
Systems Integration market. From an investment perspective, declining incentives
Local deployment of 22 GW (including 2 GW of off-grid should not introduce undue risk if they are based on sound market
application) is expected to throw up opportunities for and experience curve data. However, lack of predictability and
entrepreneurs to tap solar power development and turnkey stability of solar power regulation does pose a challenge for the
segment for grid and off-grid market. The system integration industry.
segment is a people driven and less capital intensive business.
Companies working in the areas of Engineering Procurement & The recently announced reduced feed-in tariff of Germany and
Construction segment, manufacturing, power distribution, etc. Spain at 0.3 Euro/kWh and 0.23 Euro/kWh respectively from 0.40
have started building their teams to tap this promising growth. Euro/kWh and 0.32 Euro/kWh, introduction of a 500MW project
cap in Spain and introduction of generation based subsidy from
Financing and investment capital subsidy in China are some of the recent developments in
As per Cleantech Investment Report 2009, solar remained the government policies which are expected to impact global demand
leading investment sector attracting Venture Capital in 2009, for solar products.
despite its total share of investment falling significantly from 40%
in 2008 to 21% in 2009. The increasing share of additional Grid connection
capacities in developing market (especially China & India) The location of solar power plant, particularly solar thermal, is
provides an attractive opportunity for financing class, both equity dependent upon solar radiation, availability of water and land
and debt, for deployment sector as well as for setting up which may be far from existing grid. The addition cost of grid
manufacturing facilities. connection and loss of transmission may distort the viability of an
attractive location.

Material supply/cost
Shortage in poly silicon increased the price of poly silicon to US$
400-450/kg in 2008, which then dropped back to US$ 50 per kg by
2009. When the prices were high, investments started flowing
towards thin film capacity, which requires about 1% of polysilicon
per watt as compared to the crystalline module. However, when
prices dropped, crystalline seemed more attractive than
Conclusion
amorphous silicon impacting demand of Amorphous Silicon thin
Solar energy, currently playing a small role, is expected to
film.
increase its share in the Indian energy market, primarily driven by
Also, volatile price and uncertainty of availability of poly silicon is a Government's commitment to address climate change as well as
challenge for intermediary players in the business of adhere to sustainable development. The launch of the National
manufacturing ingots, wafers and cells entering in long terms Solar Mission along with subsequent regulatory initiatives by the
supply and price arrangement. Government as a part of implementation of the mission provides
an investment and revenue generating opportunity of over USD
Land availability 40 billion for across the solar value chain from polysilicon
The land required for utility-scale solar power plants estimated at manufacturing to generation.
about 5-6 acre for every 1 MW could pose a strain on India's
available land resource. Based on the solar isolation map of India, The key challenge for faster adoption of solar in India is higher
Gujarat and Rajasthan are the most promising States for solar PV setup cost as compared to fossil fuel based power plants.
and solar thermal plants. With the launch of National Solar However, this challenge seems to be addressed as during the last
Mission, number of Expression of Interests received by 2 decades cost of setting-up solar power reduced by 20% with
Government of India is more than 10 times of the target allocated every doubling of installed capacity. Increasing investment flow in
by Government for 2010. All these players are on the look out for technology development coupled with higher PV deployment
acquiring land in these States, which have distorted demand- driven by global commitment on addressing climate change is
supply balance for land for solar power in these regions. expected to reduce cost of solar power down to a level where solar
could play a significant role in meeting future electricity needs.
With the development of the sector, solar components

manufacturers would need to work on reducing costs, utilities will
have to take risk on technological uncertainty, and regulators
need to work on predictable framework. As solar technologies
improve and the cost of electricity generated by fossil fuels rises,
solar energy is becoming more economically attractive.
The solar power industry is poised for exponential growth in India

on account of which solar investment may indeed be, at this point
in time, one of the most attractive areas in renewable energy to
invest in.
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About the Authors:
Kalpana Jain Sandeep Negi

Senior Director, Financial Advisory Senior Manager, Financial Advisory
Kalpana is Senior Director at New Delhi office and leads the Sandeep has been with the firm for over 10 years and has
Energy and Resources vertical for the Financial Advisory over 14 years of industry and consultancy experience.
practice in India. She is also the Clean Tech & Renewable His corporate finance experience includes assignments in
Energy contact person for Deloitte in India and on the India Disinvestment/ Privatisation, Mergers and Acquisition,
Advisory Board of Cleantech Group. Business Planning/ Entry Strategy, Business Restructuring
and Valuation in diverse industry sectors.
She has been with the firm for more than sixteen years, and
has over nineteen years of industry and consultancy As part of the Clean Technology and Renewable Energy
experience. During her extensive professional experience practice, he has been working actively with clean tech
of 2 decades she has advised various corporate companies in the area of solar, wind, hydro, biomass and
/government agencies in formulation of entry strategy, joint water.
venture, disinvestment/ privatisation, financial modeling,
mergers and acquisition, financial and commercial diligence,
valuation, business planning, fund raising and hiving off
businesses.
She has advised clients for national and international

projects in diverse sectors including renewable, oil & gas,
power, auto and auto ancillary, retail, education,
pharmaceuticals and media. Her involvement has been with
green field as well as brown field projects including inbound
and outbound investments.
Contact: Kalpana Jain Sandeep Negi

T : +91 124 679 2266 T : +91 124 679 2144
E : kajain@deloitte.com M : +91 98 108 53754
E : snegi@deloitte.com

Josephine Bournonville Vikram Nagargoje
Aloe Private Equity Aloe Private Equity
The Indian economy has witnessed significant growth over the Inadequate technology and insufficient
past two decades; rising standards of living have paved the way
for a major shift in consumption patterns. Whilst a bigger share of
funding: the example of E-waste
domestic revenues is being spent on goods and durables, the
pressure on energy and raw material demand is rising Take the example of E-waste. It is one of the fastest growing waste
accordingly, amplified by massive urbanisation. As a result, the streams in the world today, expected to grow at around 6%
drivers to develop and as private equity to invest in - waste annually to reach 53 million tonnes by 2012. In 2007, India itself
management and recycling businesses will keep on generated 380,000 tonnes of E-waste from discarded Computers,
strengthening over the years. Televisions and Mobile Phones. This is projected to grow to more
than 800,000 tonnes by 2012 with an annual growth rate of 15 %.
Waste in India: threat and opportunity 70 % of E-waste in India originates from government institutions
and offices, but generation from household will increase, not to
mention the 30,000 tonnes of waste illegally brought into the
India's appetite for metals and rare materials is growing
country every year.
exponentially, and so is its appetite for paper, plastic, rubber and
so on. Its ability to meet this demand whilst minimizing its Today India does not have the appropriate technology and
dependency on international imports will depend on its ability to infrastructure to manage this highly toxic waste, and to recover
recover the value encapsulated in its waste. As the government the valuable material they contain in the most efficient way. The
acknowledges this structural trend, it has to come up with a more authorized E-waste recycling facilities in India capture only 3% of
stringent and supportive legal framework to address waste total E-waste generated; the rest is dealt with by the informal
management and recycling. In fact, and contrary to the West, re- sector in very poor health and safety conditions. Highly toxic
use and recycling have always existed in India, but in an chemicals such as lead, cadmium, mercury, PVC or phosphorous
undercapitalized and inefficient way. The absence of government compounds, known to have dangerous effects on human health
involvement to regulate and structure waste management and and the environment, are processed without any serious
waste recycling has left the informal sector sole player in the field. safeguards. As a result recovery rates are very low, making the
Beyond the public incentive, the recycling industry in India has to whole process highly inefficient.
develop in two ways: by structuring an optimized collection and
sorting of the waste; and, by bringing the right technologies to
produce high value recycled new raw material out of the waste.
These developments have to be done whilst taking into account
the social and economical characteristics of the country.

Initiating a virtuous circle Similarly, as more people are becoming aware of the value in E-
waste in the context of depleting natural resources, new recycling
facilities are being opened to seize the material recovery business
The informal waste industry employs over one million people in
opportunity. Around a dozen have received an official
India, from waste collection (ragpickers), sorting, re-use, to the
authorization from the Pollution Control Board within the last five
more organised door-to-door collection, composting and material
years. The government has aired its intent to accelerate this trend,
recovery. Like many developing countries, recycling in India is
and the structuring of the sector is under way. Today most of the E-
economically vital in terms of employment generation for unskilled
waste facilities are only engaged in the pre-processing of the
urban populations. Hence, it is important to integrate and
waste and export it for more efficient recovery. They need to
capitalize on these existing systems while building the waste
develop their capacity and invest in modern equipment, and are
management models of the future. One should not see the
currently turning towards private investors.
informal sector as a direct competitor to a formal sector in its
infancy, but rather as the basis on which to start a comprehensive Another waste streams, batteries, will receive rising attention as
scheme, able to access a very wide market more rapidly. the IT and telecom market develop. As nearly more than 10 million
Indians subscribe to a new mobile phone line every month, the
The whole value chain must be incentivised to develop as a more
amount of waste batteries will become tremendous. A battery is
rationalized industry, which will be possible by upgrading
made of very valuable materials, and new techniques are
technologies at the end of the value chain. Part of the new value
emerging to recover the maximum proportion possible. The
generated by selling higher quality products will be transferred to
French company Recupyl has developed a patented process to
the beginning of the chain and establish incentives for higher
recover lithium from batteries and solar panels (another upcoming
collection rates, enabling basic investments (transport means for
waste stream) and is growing through joint ventures in America,
the collectors starting with mopeds- infrastructure, safety
Europe and Asia. Typically, such a partnership would be highly
equipment, etc). In turn, the formal sector will progressively invest
valuable for an Indian company. It also offers potentially high
up the value chain, setting up official collection points and
returns on investment for private equity funds.
distribution channels in a new virtuous circle.
A sector full of opportunities for Private

Equity investors
The technology investments required in India are not simply the

same as those a developed country would require. In most cases,
the capital requirements are inferior and there are more people
employed; the core of the technology however, which is what
really makes the output different (recycling versus downcycling),
is similar. These savings made on the investment can even be an
opportunity to set up more expensive breakthrough recycling
technologies. A good example of the opportunity to grow
successful and high end recycling businesses in India is the PET
bottle recycler Polygenta Technologies, based in Nashik. PET
bottles have made a spectacular entry into the Indian market in
the past few years, recording annual growth rates in excess of 20
% per annum, in the wake of the economic and consumption
boom. The recycling of PET bottles is done in high proportions in
India, due to the acknowledged value of PET, and the channel is
well developed. Technologies are now being scaled up to take full
advantage of this opportunity. Pioneer among them, Polygenta
Technologies has developed a unique process to depolymerize
coloured PET bottles back into virgin polyester and uses it to
manufacture new textile fibres, a process which cannot be found
anywhere else in developed countries. Indeed, it possesses the
only economically viable technology able to chemically recycle
any type of PET bottles back into virgin PET.

Environmental problems are global, but their solutions have to be In November 2007, Greenko was listed on the AIM market in
addressed locally, taking into account the economic and social London, where it raised 45 million Euros from new investors to
specificities of one particular location or country. Indeed, one further consolidate its activities and expand its power capacity. In
does not set up a clean energy producer or a recycling business 2009, Greenko secured a 46 million dollar investment from Global
like one sets up an IT company. Environment related activities are Environment Emerging Market Fund (GEF), followed by a 72
capital intensive; they are influenced by their country or sector million sterling pound investment from TPG, M&G and Blackrock
regulations, and require a longer term commitment from their in early 2010. These successive fundraisings provided Greenko
financial partner. Whilst this may represent a challenge for a with the financial means to become one of the leading
Private Equity fund, it is also an opportunity to bring additional independent energy producers in India. Today Greenko has total
value beyond the financial input. Greenko Group, an Indian installed capacity of 158MW, and a licensed capacity of 421 MW
renewable energy producer, is an example of how an spread across hydro, biomass and gas.
environmental company set up to answer and capitalize on a
specific national situation, is in turn having a positive impact on Greenko's activities have a significant impact on local
local economic and social development whilst providing high employment and help reduce rural depopulation, which is a major
returns to its investors. challenge for modern India. Beyond the construction and
operation of the plants, the collection and transport of agricultural
India has been facing a structural electricity deficit over the last waste also generates significant direct and indirect employment.
decade. Its production capacity is 15% inferior to the demand in Greenko's activities give economic value to agricultural and wood
peak period. This situation hampers India's economic waste and provide stable power to neighbouring industry farmers
development and leaves a large proportion of rural areas in the and households. Today Greenko directly employs 600 people
dark. However, the country has wide and non exploited resources (1,300 including contractors) and reduces carbon emissions by
which could be use for electricity production: its biomass, and its 1,448,909 tonnes a year.
multiple rivers. Biomass and hydro-power offer an interesting
alternative to fossil fuels which today account for ¾ of the Considering the share price in mid-March 2010, Greenko's value
electricity production through thermal power stations- they also has increased fourfold in twelve months. By providing Greenko
create local employment through waste collection and the with its initial capital requirement, backing it until floatation, and
management of power production units. offering its expertise all along its development, Aloe has
significantly contributed to the success of the company and its
In light of this observation, Greenko was created by Aloe Private environmental and social impact, whilst enjoying a high return on
Equity and by Indian entrepreneurs Mahesh Koli and Anil its investment.
Chalamalasetty in February 2006. At the time, the market for
credit carbon was just emerging, and would trigger formidable
opportunities. Operations were quickly started by buying back
several distressed biomass units across the country, which were
running under capacity and had lost the interest of their original
investors. Soon after turning these around, the company was able
to expand its activities to run-of-river hydro power and started to
build its own power plants, with the reiterated financial support of
Aloe Fund II.
Aloe prides itself on making the founder's dream a reality and

encourages prospective portfolio companies to meet with the
founders and CEOs of existing portfolio companies to truly
understand the value that Aloe generates and the transparent
manner in which Aloe operates. Aloe respects the planet and
its people, careful considering local communities' effects and
private equity
global ramifications, before making an investment. They are
recognised by their Limited Partners as strong alpha
investors who proactively seek out investment opportunities
About Aloe Private Equity based on independent thinking and sometimes contrarian
Aloe is an entrepreneurial and globally successful investor analysis.
dedicated to growing highly profitable environmental and
socially sustainable companies. They currently have three Contact:
josephine.bournonville@aloe-group.com
funds under management and are actively investing. With
Vikram.Nagargoje@aloe-group.com
offices in London, Paris, Mumbai and Beijing, Aloe is the
international high-integrity partner that can deliver global www.aloe-group.com
expansion. The Group excels at fostering portfolio Office:
companies' growth and driving proven technology into new Construction House 8-10, High Street,
markets, whether that is European companies targeting 5 Walchand Hirachand Marg Twyford, RG10 9AE
emerging markets or Asian companies targeting mature Ballard Estate United Kingdom
markets. Mumbai - 400 001 T: +44 1189 346858
T: +91 22 4355 7300

Ritesh Banglani, Vice President, IDG Ventures India
For a few years now, the global carbon market has been the Next Big Thing for Indian products and services companies. The global market
for carbon is huge (carbon credits worth $125 Billion were traded in 20091) and fast growing (trading volumes grew 96% between 2008 and
20091), and emerging markets seem set to play a huge role in the carbon ecosystem. In 2009, 12% of all carbon traded globally was from
emerging markets, as shown in the chart below:
Primary CER Sources by Country, 20092
China, 72.49%
CHINA
Chile, 0.45%
Cambodia, 0.02%
Brazil, 1.53%
Bolivia, 0.01%
Armenia, 0.01%
Argentina, 1.33%
Uzbekistan, 1.33%
Thailand, 1.08%
South Africa, 0.49%
Philippines, 0.91%
Peru, 0.61%
None, 1.13%
Nigeria, 3.46%
Mexico, 1.82%
Malaysia, 2.03%
Israel, 0.86%
Indonesia, 0.72%
India, 6.79%
INDIA
Colombia, 2.32%

India's role in the carbon market is still very small compared to the
size of its economy and its power industry. Of the $1.4B worth of
credits registered in all emerging markets, only $100m worth were
registered in India. However, India's share of registered carbon
credits is expected to grow to 33% by 2012, and it is expected to
be the world's fastest growing CER supplier by that time3. A related opportunity exists in the aggregation and trading of
carbon assets from multiple sources. While a fairly liquid
In addition to the global carbon trade, a large domestic market is secondary market for carbon exists globally, primary carbon
expected to come up in India in the next 5 years with the credits are very often distributed too thinly to be traded efficiently
introduction of two new domestic cap-and-trade programs. The by the principals. Such services companies can also help their
Renewable Energy Certificate (REC) scheme stipulates that any clients securitize their credits portfolio and help obtain financing.
new power generation capacity in India needs to have a minimum The aggregation and trading business also presents an
10% renewable component. Such renewable capacity needs to opportunity for services firms to participate in the upside of the
be either implemented in-house, or bought in the form of RECs, primary credit owners due to a commissions-based fee structure.
which will be tradable over the counter. In the next 10 years,
15,000 MW of renewable power capacity is expected to be At the carbon consumption end of the scale, opportunities are
tradable through RECs4. created by regulation, corporate responsibility initiatives, and
requirements from a global supply chain all of which drive
Another program, the Energy Saving Certificate (ESC), will companies to measure and optimize their carbon footprints. Two
stipulate targets for energy consumption in energy-intensive clear market opportunities have emerged in this space so far.
industries such as steel, cement and petrochemicals. Energy
savings below the targets can be traded in the form of ESCs. By A large market exists for high-end carbon consulting, where the
2015, 5% of the energy consumption in these industries is consultant helps its clients estimate their carbon footprint, identify
expected to be tradable as ESCs4. avenues to optimize carbon consumption, plan for future carbon
credit requirements, and structure contracts for the purchase of
Of course, the biggest challenge in the carbon market is the future credits. Such consulting work requires deep domain
uncertainty about the continuation of a cap-and-trade carbon knowledge, and offshore consulting in this area has been limited
regime after the Kyoto Protocol expires in 2012. The Copenhagen so far. However, a few global consulting firms have started to
Accord, which is non-binding, could become a potential offshore the analytical portion of such projects, and the
replacement for the Kyoto regime, but its formal adoption and opportunity exists for dedicated carbon consulting firms to
implementation is highly uncertain. In the absence of a global cap- execute a majority of the projects in India.
and-trade regime, several regional and country regimes like
RGGI in the US and NSW in Australia are expected to take up the The other opportunity in the carbon consumption space IT
slack. Services holds the maximum promise for Indian companies. The
current opportunity seems to be in measuring, monitoring and
performing analytics on, and forecasting carbon emissions for a
plant or across an organization. Such projects require skills and
processes that the Indian IT Services industry has perfected over
the last two decades, and are applicable across a wide range of
industries in developed markets. Over time, some of the custom,
domain-specific work currently undertaken by consultants such
as carbon optimization, carbon impact assessment for new
processes and equipment etc. can also be built into systems. In
2009, 53% of global Carbon IT Services revenue was composed
of implementation services, followed by planning services
accounting for 32%. The total market size stood at $1.4 Billion in
2009, including $300 million of product revenue, and is projected
to grow to $5.1 Billion by 20155. A few Indian IT Services
companies have set up significant-sized carbon practices in the
last few years, but a very large opportunity exists for dedicated
carbon IT Services companies in India.

Carbon
Consulting
Carbon IT Services
Carbon Credit
Aggregation & Trading
CDM advisory
As shown above, the opportunities for services companies range from plain vanilla CDM advisory to very high end consulting services. It is
important for the industry in India to find the right balance between scalability and margins while deciding its portfolio of services offerings.
Sources:
1: Bloomberg Energy Finance, 2009
2: The World Bank, State and Trends of the Carbon Market, 2009
3: UNEP projections, 2009
4. Bureau of Energy Efficiency estimate, 2009
5: Global Industry Analysts, 2010
About the Author:

Ritesh Banglani, Vice President
Ritesh Banglani is a Vice President at IDG Ventures India.

He currently serves on the Boards of Ozone Media, and is an
About IDG Ventures India: observer on the Board of Kreeda Games.
Formed in September 2006, IDG Ventures India manages a Prior to joining IDG Ventures India, Ritesh was a product
US$150 Million venture capital fund focused on helping manager with Adobe Systems in Bangalore, where he
entrepreneurs grow innovative companies on a global basis. focused on creating new business models for Adobe's online
We believe that the rapid increase in the market for media properties. Previously he managed the mobile games
technology products and services in India, the proven value business at July Systems and introduced pioneering mobile
of India as an offshore resource base and the games services in American and European wireless
entrepreneurial spirit and talent of its people, creates an markets. Earlier in his career he worked in field operations
extremely bright future for venture capital investing in the roles at Synopsys Inc.
country.
He serves as Guest Faculty at IIM Bangalore, where he
We typically invest between US$0.5-5 Million in early-stage teaches Innovation Strategy.
companies and opportunistically up to US$10 Million in
compelling growth-stage companies. Ritesh holds a B.Tech in Electrical Engineering from IIT Delhi
and an MBA from INSEAD.
For more information, please visit www.idgvcindia.com

Where's the deal action in Indian
Cleantech? -The Ecoforge Viewpoint
In which sectors within the Indian Cleantech have a good track record of executing power projects, particularly
renewable energy projects. Hence, the scope for start-ups is
space are you seeing the most interest among limited in the grid-connected renewable energy generation sector.
investors? However, we see opportunities for start-ups to provide services
that feed into the renewable energy generation segment. There is
a lot of scope for creating value through service innovation here.
Renewable Energy generation projects, particularly grid- Off-grid renewable energy and energy efficient lighting segments
connected Small Hydro, Wind, Biomass and to a smaller extent have a lot of scope for start-ups, in addition to segments such as
Waste-to-Energy and Solar PV projects are of very high interest to smart grids, which are in a nascent stage in India at the moment.
investors at the moment and this sector is seeing large number of There is also a lot of scope for product and services innovation in
M&A/PE deals. improving energy efficiency of residential and commercial
buildings as well as industrial establishments and investors might
Solar PV and related equipment manufacturing sector has also be interested in backing high potential start-ups in that segment.
started to see some M&A/PE action lately. However, the Solar Water and waste management might also offer some
Energy segment (Grid-connected Solar PV, Solar PV/Solar opportunities for start-ups.
Thermal equipment manufacturing) in general will probably start
attracting more PE/M&A activity once project developers begin to What's your outlook on carbon credit (CDM)-
utilise the provisions of National Solar Mission with full force. Off- related opportunities in India?
grid renewable energy deployment, particularly in the Solar
Energy sector - for applications such as telecom towers, roof-top The uncertainty surrounding Kyoto Protocol's successor in the
and solar water heaters - is also a growing area, which should post-2012 world has definitely dampened the spirit that existed in
attract considerable interest from investors very soon. the Carbon Finance/CDM space between 2006 and 2008. Lower
carbon prices as compared to pre-recession days have also
Green lighting solutions such as LED, CFL and Solar lanterns - for
resulted in CDM-related opportunities becoming less attractive.
both on-grid and off-grid applications – are also attracting
The ongoing debt crisis in Europe has also contributed to this
considerable Venture Capital interest lately. Green transport is
situation since the European Union is by far the largest buyer of
another area that we are watching closely. Biofuel segment might
carbon credits in the world. Nevertheless, eligible projects, which
also become attractive in the near term, especially for transport,
include renewable energy generation projects that have seen
due to the recent de-regulation of petrol prices by the
tremendous growth recently, are still pursuing CDM revenues
Government. This segment might become much more attractive if
since they are definitely not negligible. Additionally, REDD
the proposed diesel price de-regulation also materialises soon.
mechanism for forestry and newer approaches such as
Programmatic CDM for smaller projects might result in renewed
Is the scope for start-ups high in this segment interest in CDM/Carbon credit mechanisms in the near future.
or do you think investors would prefer more Interestingly, CDM-related opportunities in the energy efficiency
sector seem to be opening up lately, which is quite a welcome
mature companies? development since CDM has largely been utilised by energy
In the grid-connected renewable energy generation, we are not generation projects until now.
sure if there is much scope for start-ups due to high capital
investments and long gestation periods. Also, start-ups are Alternative mechanisms of financing emission reduction projects
perceived by investors to be carrying high execution risks due to a in developing countries by developed countries might also come
lack of track record, unless of course the start-up's promoters up in the near future and we are closely watching international and
Indian climate change policy changes.
The author, Sagar Gubbi, is the Co-founder and Managing Ecoforge's strategy consulting arm provides high quality
Partner of Bangalore-based Ecoforge Advisors Pvt Ltd., a consulting services to its clients and helps them make the right
financial advisory firm focused on the Clean Energy and decisions which can have a positive impact on their double
Green Business space. Ecoforge, due to its twin targets of bottom line (financial and environmental).
financial and environmental sustainability, along with its small,
Sagar has an MBA from the University of Oxford's Said
boutique nature of operations, is in a great position to bring
Business School in the UK.
down the cost of capital and cost of raising capital for
renewable energy projects in India. The firm is working with
several PE funds both from India and abroad and represents Contact: Sagar Gubbi
two European PE funds in India. E: sagar@ecoforge.in
M: +91-97312-02201
www.ecoforge.in

Charandeep Kaur, Partner, Trilegal
The price of the RECs will be determined through market

discovery mechanism with the ceiling and floor prices being
regulated by the regulator at the central level. As the solar power
Apart from offering feed-in tariffs for renewable energy projects are comparatively more capital incentive than other
projects, providing various exemptions, subsidies and renewable energy projects, the REC mechanism provides for a
tax benefits, recently the Government has introduced higher price for solar RECs than that of RECs for other renewable
Renewable Energy Certificates (RECs) in India. How energy. The RECs will be traded only on power exchanges in
significant do you think the REC mechanism would be India.
in changing the economics of renewable energy
The RECs will be issued to a power producer on the basis of units
projects and what place it may hold in the revenue
of electricity, injected into the grid and duly accounted in the
model of private equity investors? energy accounting system. Each REC will represent 1 MWh of
power generated by a project and injected into the grid. An REC
The Government has introduced the Renewable Energy
will be valid for a period of 1 year from the date of its issue.The
Certificate (REC) mechanism in January 2010. This mechanism
successful implementation of the REC mechanism is dependent
resembles the Tradable Renewable Certificate system well
on the concept of renewable purchase obligation (RPO) and the
established in the West. The REC mechanism provides for
renewable energy surcharge (RE Surcharge) specified for
segregation of the 'green component' from the electricity
Discoms by the regulators in the electricity sector at the central
generated. In other words, the developers may either sell the
and the state level. To explain, the RPO provides for a certain
power generated at preferential tariffs to distribution companies
quantum of renewable power to be present in the energy mix. If
(Discoms) or segregate and trade in the 'green component' in the
subject to availability of sufficient renewable power to be
form of RECs and simultaneously sell the power generated at
purchased, a distribution licensee fails to fulfil its RPO, it is liable to
normative prices. The REC mechanism provides for two types of
Pay an RE Surcharge. However, in practice even though most
RECs one for solar power and the second for power from other
state electricity regulatory commissions have already introduced
renewable energy sources.
RPOs and a few have provided for RE Surcharges to be levied on
defaulting Discoms, the RPO mechanism is presently weak and
ineffective due to lack of sound enforcement provisions.

What are the key regulatory changes that
private equity investors in the solar sector
should watch out for?
The recent launch of the Jawaharlal Nehru National Solar Mission One of the key features of the Guidelines is that it provides for lock-
(Mission) is a significant regulatory change in the solar sector. The in of controlling shareholding for a period of 3 years from
mission focuses on promoting large scale generation of power commissioning of the project. Similar restrictions are provided
and indigenous equipment manufacture to supplement it. The under hydro power policies of a few states, including Himachal
Mission envisages three major initiatives including creating Pradesh and Punjab. The restriction of maintaining the controlling
volumes which will allow large scale domestic manufacture, shareholding often results in various investment structures being
announcing a long term policy to purchase power and supporting adopted for acquiring a stake in renewable energy projects.
research and development to reduce material consumption and Further, the Guidelines mandate inclusion of domestic content in
improve efficiency. establishment of projects. This mandatory requirement may have
a negative cost impact and could create problems for developers
As far as the implementation of the Mission is concerned, the draft particularly in relation to supply chain management, lack of
guidelines for new solar power projects under it have been issued technological experimentation and reliability and bankability of the
(Guidelines) and are yet to be notified by the Government. The projects.
projects under the Mission will be selected through competitive
bidding process and qualification criteria for such selection are The Government has also issued the draft for consultation of
prescribed in the Guidelines. memorandum of understanding, power purchase agreement and
power sale agreement which will be executed between the nodal
agency designated under the Mission and power producers for
sale of power (Documents). Though the execution of the
Documents provide certainty with regard to sale of power,
provisions for levy of damages in case of failure by the nodal
agency to off-take power and pass through of damages received
from a distribution licensee under the power sale agreement do
not seem to provide adequate comfort to power producers.
About the Author: Charandeep Kaur, Partner

Charandeep Kaur is a Partner at Trilegal, a full service law firm
of India and rated as part of India's magic circle. She
specialises in mergers and acquisitions, joint ventures, private
equity investments, entry strategies and foreign direct Contact: Charandeep Kaur (Partner)
investment. She has experience in various cross border
transactions across sectors including in energy, IT,
E: charandeep.kaur@trilegal.com
automotives, foods and logistics. Charandeep is engaged in T: + 91 11 4163 9393
diverse corporate practice advising clients on labour issues
and enforcement issues, regulatory policy and requirements,
prevailing government policies and regulations, statutory
registrations, exchange control issues, imports and exports,
investment and tax structuring and restructuring, and
corporate compliance. Her clients include Goldman Sachs,
Merril Lynch, Mitsui & Co. Ltd., Thomson Reuters, Sojitz
Corporation, Deutsche Bank, Axis Bank, GE, Abengoa Solar,
Helion Ventures and Lifeline Screening. A-38, Kailash Colony, New Delhi 110 048, India

Listing of Investors with Special Focus on Cleantech
Aloe Private Equity
private equity
Office Address:
INDIA UNITED KINGDOM Other Office Locations:

Construction House 8-10, High Street, London, Beijing, Paris
5 Walchand Hirachand Marg, Twyford, RG10 9AE
Ballard Estate, United Kingdom
Mumbai-400 021 Tel: +44 1189 346858
Tel: +91 22 4355 7300
Contact:
Vivek Tandon Vikram Nagargoje
E: vivek@aloe-group.com E: vikram.nagargoje@aloe-group.com
About us
Aloe is a Private Equity firm with a strong focus on green tech investments in Europe, Greater China and India.
IDG Ventures India
Office Address: Other India Office Locations:

7B, 7th Floor, Sobha Pearl Mumbai
1, Commissariat Road
Bangalore-560 025
India
Tel: +91 80 4043 4836
Fax: +91 80 4132 9226
Contact:
Ritesh Banglani Raghu Rao
E: ritesh_banglani@idgvcindia.com E: contact@idgvcindia.com
T: +91 98459 22114
About us
IDG Ventures India is an early-stage venture capital firm investing in technology and technology-enabled
companies.

International International Finance Corporation

Finance Corporation
World Bank Group
Office Address:
Vibgyor Towers, C - 62, Bandra Kurla Complex, Bandra (E), Mumbai-400 051, India
Tel: +91 22 4230 2400
Fax: +91 22 4230 2401
Other India Office Locations:

Delhi, Chennai, Kolkata
Contact:
Pravan Malhotra
E: pmalhotra1@ifc.org
We are interested in
Early-to-growth stage equity investments in Cleantech (Renewables, Water, Energy Efficiency).
India Alternatives
Office Address:
301/302, 36 Turner Road, Bandra (w), Mumbai-400 050. India
Tel: +91 22 2643 2601
Fax: +91 22 2643 2604
Contact:
Shivani Bhasin Sachdeva Ashish Agrawal
CEO VP, Investments
M: +91 98675 80509 M: +91 98705 47047
T: +91 22 2643 2605 T: +91 22 2643 2603
E: shivani.bhasin@india-alt.com E: ashish.agrawal@india-alt.com
About us
India Alternatives is a Private Equity Fund, typically investing USD 5-15 million in mid-growth stage companies.
We are interested in Renewable Energy, Water Solutions, Waste Management and Energy Efficiency companies.

Ventureast
Ventur ast
Office Address: Other Indian Office Locations
5B, Ramachandra Avenue, Hyderabad
Seethammal Colony, First Main Road,
Alwarpet, Chennai-600 018
Tel: +91 44 2432 9863 / 64
Fax: +91 44 2432 9865
Contact:
Rama Bethmangalkar Siddhartha Das
E: rama.bethmangalkar@ventureast.net E: siddhartha_das@ventureast.net
T: +91 44 2432 9863 T: +91 44 2432 9864
Companies/Sectors we are interested in

Technology enabled solutions to address problems in energy, education, financial services, IT, manufacturing,
health-care etc.

Listing of Advisory firms with Special Focus on Cleantech
BDO Consulting Pvt. Ltd.

42 Free Press House, Ahmedabad, Bengaluru, Chennai, Hyderabad, Jaipur, Kolkata,
215 Nariman Point, Mumbai (Andheri E), New Delhi, Pune, Vadodara
Mumbai - 400 021
Tel: +91 22 6132 6999
Fax: +91 22 2285 6237
Contact:
Sarah George
E: sarah.george@bdoindia.co.in
T: +91 22 66729681
Companies/Sectors we are interested in

Banking and Financial Services
Manufacturing
Service Industry
Cipher Capital Advisors
Office Address : New Delhi USA

A122, Gokul Arcade, 424, Regus Business Centre, 2603 Camino Ramon,
Sahar Road, Vile Parle (E), District Commercial Complex-D4, Suite 278, San Ramon,
Mumbai - 400 057 Saket, New Delhi 110 017 CA 94583
Tel: +91 22 6777 4777 Tel: +91 11 4051 4163 Tel: +1 925 901 0918
Fax: +91 22 6777 4778
Contact:
Abhay Anand Prashant Maniar
T: +91 98205 35140 T: +1 408 202 7381
E-mail: abhay@cipher.in M: +91 99872 63480
E-mail: prashant@cipher.in
Sectors of interest
Energy & Environment: Power, oil & gas, wind, hydro, solar, biomass/ biofuel, water, waste, waste-to-energy,
T&D, BoS / BoP

Deloitte Touche Tohmatsu India Pvt. Ltd.

7th Floor Building 10, Mumbai, Bangalore, Kolkata, Chennai
Tower B, DLF Cyber City Complex,
Gurgaon, Haryana - 122 002
India
Tel: +91 124 679 2000
Fax: + 91 124 679 2012
Contact:
Kalpana Jain
E: kajain@deloitte.com
About us
Our corporate finance service line helps companies in clean technology & renewable sector in fund raising,
joint venture, merger & acquisition, entry strategy analysis & business planning
EcoForge Advisors
Office Address:
No. 297, 35th Cross,
7th C Main Road,
Jayanagar 4th Block
Bangalore-560 011
India
Contact:
Sagar Gubbi Anand Vardaraj
Managing Partner Managing Partner
E-mail: sagar@ecoforge.in E-mail: anand@ecoforge.in
M: +91 973 120 2201 M: +91 984 505 5034
T: +44 755 197 8826
About Us
Ecoforge is a boutique investment advisory and consulting firm focused on utility-scale and off-grid
(captive and micro generation) renewable energy sectors

KPMG India Private Limited

www.in.kpmg.com
Office Address:
Lodha Excelus
1st Floor, Apollo Mills Compound,
N.M.Joshi Marg, Mahalakshmi,
Mumbai-400 011
Tel: +91 22 3989 6000
Fax: +91 22 3983 6000
Contact:
Abizer Diwanji Parag Sharma
Executive Director Corporate Finance Associate Director Transaction Services
Head Financial Services E: paragsharma@kpmg.com
E: adiwanji@kpmg.com
About us
KPMG's Corporate Finance practice in India has a successful track record of providing a broad range of financial
and strategic advisory services to clients across a wide array of industries. These services comprise objective
advice on mergers and acquisitions, financing options and evaluating strategic alternatives.
PricewaterhouseCoopers
Office Address:
252 Veer Savarkar Marg,
Shivaji Park, Dadar,
Mumbai-400 028
Tel: +91 22 6669 1000
Fax: +91 22 6654 7801
Contact:
Kameswara Rao Debasish Mishra Shubhranshu Patnaik
E: kameswara.rao@in.pwc.com E: debasish.mishra@in.pwc.com E: shubhranshu.patnaik@in.pwc.com
T: +91 40 66246688 T: +91 22 66691287 T: +91 124 330 6008
We are Interested in
Coal, gas, hydro, renewable power projects of all sizes
Assets in electricity equipment space
EPC firms in the generation, transmission and distribution

resurgentindia Resurgent India Limited
Office Address:
NEW DELHI KOLKATA

B3, Bali Bhawan, 2nd Floor, 310, Jindal Towers,
Lajpat Nagar II Block-B, 21/1A/3, Darga Road,
New Delhi-110 024 Kolkata-700 017
Tel: +91 11 2981 0219/0303 Tel: +91 33 6452 5594/2290 2468
Fax: +91 11 4135 4882 Fax: +91 33 2290 2469
Contact:
Kavish Sarawgi Manish Kedia
E: kavish.sarawgi@resurgentindia.com E: manish.kedia@resurgentindia.com
About us
Resurgent India is a knowledge-oriented full service investment bank and financial consulting firm that provides
services in area of Debt, Equity and Transaction Advisory

Looking to raise funds for your
Cleantech venture?
Venture Intelligence is your one-stop information point for
your fund raising process.
The Venture Intelligence “Entrepreneur - Fund Raising” package includes:
List of PE/VC investments in Cleantech during the previous year
Latest Directory of PE-VC Firms (or Early Stage Investors Directory) active in India
6-month Subscription to Venture Intelligence Deal Digest Daily & Weekly Newsletters
For more details contact us at info@ventureintelligence.in or call us at 044-4207 4195

Looking to acquire
Cleantech companies?
As India's largest Deal information Bank, Venture Intelligence

provides the most exhaustive information on Private Equity
and M&A activity in the Cleantech industry.
The Venture Intelligence “Cleantech Industry Package” includes:
Quarterly Digest of PE and M&A deals in the Cleantech industry in a spreadsheet format
Annual Subscription to Venture Intelligence Deal Digest newsletters, summarizing all the PE
and M&A action in India on a daily and a weekly basis.
For more details contact us at info@ventureintelligence.in or call us at 044-4207 4195

Venture Intelligence, a division of TSJ Media, is the leading source of data and analysis on Private Equity, Venture
Capital and M&A deals in India.
Our research and analysis is used extensively by PE / VC industry practitioners, Entrepreneurs, CXOs of large
corporations, the media as well as regulatory agencies. Our publication subscribers include leading PE / VC Firms,
Limited Partners, Investment Banks, Law Firms, HR Services Firms and Consulting Firms.
Venture Intelligence products are a one point source for information and analysis on:
Private Equity, Venture Capital and M&A deals

Companies looking for investors and M&A deals
New Funds being raised
Our products include:

Databases
Profiles of all Private Equity, Venture Capital and M&A deals since 2004
Includes searchable profiles of all PE/VC firms and PE/VC-backed companies
Newsletters
Daily & Weekly formats for practitioners in the deal ecosystem

Sector-focused monthly format for entrepreneurs
Private Equity & Venture Capital Reports
Quarterly and Annual reports on PE & VC trends.
Directories
Private Equity & Venture Capital Directory

Directory of Early Stage Investors
Investment Bank Directory
Conferences
Venture Intelligence conferences are a leading platform that bring together investors and
entrepreneurs in a focused manner that facilitates discussion and networking. Speakers at
Venture Intelligence Conferences are typically investors, entrepreneurs and CXO/Boardlevel
executives from accomplished companies.
TSJ Media Pvt. Ltd.

83/2, 1st Floor, 3rd Street, Karpagam Avenue, R.A. Puram, Chennai-600028
Tel: +91 44 42074195. Email: info@ventureintelligence.in
Web: www.ventureintelligence.in
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Private Equity Pulse

PE and M&A in Cleantech 4

What PE/VC investors think 10

Opportunities for PE in Cleantech in India

Green Infrastructure - A Viewpoint

Myths, hypes and realities of Solar Power

Opportunities and Challenges in Solar sector

Restructuring the recycling industry in India

Opportunities in the Carbon Market

Where's the deal action in Indian Cleantech?

Cleantech Investing The legal perspective

Listing of Investors with special focus on Cleantech 42

Listing of Advisors with special focus on Cleantech 45

© TSJ Media Private Limited. All rights reserved.

3 © TSJ Media Private Limited. All rights reserved.

PE Investments in Cleantech - By Sector - Value*

6% Power Producers (Multiple Sources)

* Jan 04-Apr 10 Source: Venture Intelligence PE Deal Database

PE Investments in Cleantech - By Sector - Volume*

12% Hydel Energy

15% Bio Energy

* Jan 04-Apr 10 Source: Venture Intelligence PE Deal Database

4 © TSJ Media Private Limited. All rights reserved.

Amount ( US$ M ) No. of Deals

Source: Venture Intelligence PE Deal Database

PE Investments in Wind Energy

Amount ( US$ M ) No. of Deals

Source: Venture Intelligence PE Deal Database

5 © TSJ Media Private Limited. All rights reserved.

Amount ( US$ M ) No. of Deals

PE Investments in Solar Energy

Amount ( US$ M ) No. of Deals

6 © TSJ Media Private Limited. All rights reserved.

Amount ( US$ M ) No. of Deals

Source: Venture Intelligence PE Deal Database

PE Investments in Bio Energy

Amount ( US$ M ) No. of Deals

Morgan Stanley, Credit Suisse, IDFC PE,

Greenko Group Multiple 115 Multiple Jan-10

7 © TSJ Media Private Limited. All rights reserved.

Sectorwise M&A deals in Cleantech

* Jan 04-Apr 10 Source: Venture Intelligence M&A Deal Database

Yearwise M&A deals in Cleantech

* Jan 04-Apr 10 Source: Venture Intelligence M&A Deal Database

8 © TSJ Media Private Limited. All rights reserved.

* Jan 04-Apr 10 Source: Venture Intelligence M&A Deal Database

Top M&A Deals in Cleantech

REpower Systems Suzlon Energy Wind Energy 1609 91 Feb-07

Hansen Transmissions Suzlon Energy Wind Energy 565 Mar-06

Honiton Energy Holdings Suzlon Energy Wind Energy 500 Jul-08

9 © TSJ Media Private Limited. All rights reserved.

Water is top of mind

How Investors Rated Each Sector

10 © TSJ Media Private Limited. All rights reserved.

11 © TSJ Media Private Limited. All rights reserved.

12 © TSJ Media Private Limited. All rights reserved.

Renewable Power India

Figure 2 : Renewable Potential Vs Achievements in India

13 © TSJ Media Private Limited. All rights reserved.

Growth of Renewables over the years (M W)

Year Wind SHP Biomass + Bagasse Solar

2005 - 06 4433 1747 868 2.74