In this final part of the essay series, I would like to highlight some other considerations for early stage startups who are interested in the cleantech space, specifically in consumer financing.

Successful Business Models in Solar Financing

There are two models that I have seen that seem to have gained traction:

Fully Integrated Value Chain - In a fully integrated model, the same company controls the entire manufacturing, EPC, financing and O&M. The obvious advantage of such a model is that a single company and often a single salesperson talks to the customer and answers all the questions. This helps in customer acquisition and closure, however, one must be aware that manufacturing, financing and services are all three very different businesses - To put them all under one roof would present its challenges. We have seen such models succeed in automobiles etc. but retail solar is a nonstandardized project business hence time will determine how a fully integrated model will scale. Also, it comes down to the personal preference of an entrepreneur as to what kind of business a) will solve the problem they are after and b) they feel most confident of running.
Solar vertical in an existing financial institution - Whilst a monoline financing business for retail solar may be challenging, there is an opportunity for an existing financial services company - that already has a book, captive customers and processes already in place - to look at solar financing. I have been speaking with banks and NBFCs lately and there is a strong intent in building a climate / solar book - I think it’s a great initiative and one with successful precedents.

Opportunities Outside of Solar

There is a big world out there in cleantech outside of solar. There are several adjacent areas - I am naming a few but this is not a comprehensive list by any means.

Electric Vehicles - Be it charging infrastructure, vehicles (2w, 3w, 4w, Buses), fleets etc. there is a huge opportunity in India.
Energy Efficiency - Almost all of the clean energy conversation happens from the supply side but the demand side interventions also hold significant value. Energy efficiency products, system designs and services have a tremendous value proposition for the customer.
Others - Overlay of financial services, lending and fintech can be across various other subsegments like waste management, circular economy, reusables.

Some Parting Thoughts

Business Model Validation
If you are starting out, I strongly recommend doing the Aspiring Founders program at YCombinator. The course is at no cost and teaches you a structured way of thinking about building a business: Team, Problem, Users and Product (or Solution) - in that order. We often build things no one wants to buy - hence speaking to customers, understanding their problem is the absolute first step. This program is tech oriented and perhaps US specific but it provides a strong enough framework to test your idea.
“And this above all - To Thine Ownself Be True”
Every few years some themes become buzzwords. They have their own life of a year or two and then they fade. Across my last ten years, I have heard many such themes such as climate, impact, sustainability and ESG. All of these are very real areas of work and must not be seen as fields with an opportunistic tailwind that one must encash on. Its heartening for me to note that, despite the challenges, most of my industry friends continue to remain in solar, perhaps because we all share a common purpose towards our work. Finding the right reasons to be in this business is important. Also, finding the right set of team members, investors and advisors are equally critical … because it takes a village.

Personal Note

I took the time during Covid to reflect on my learnings and from my current vantage point, a monoline retail solar lending business does not seem economically viable, hence, I have decided to pursue other interests in this field.

I appreciate you taking the time to read this long series.

Sishir’s Newsletter

Solar Financing in India - Part 5