Cleantech Forum Delhi: Solve India’s problems, and you can solve the world’s

Cleantech Forum XXIV happened in Delhi last week. Nick Parker, in his opening remarks, said “Solve India’s problems, and you can solve problems for another 2 billion people of the world.” That to me signifies the economic promise that cleantech holds for India.

Below are key takeways I gleaned from the event’s keynote speeches, panel discussions, entrepreneurs’ pitches, and networking breaks. Time permitting I will post more detail later.

Cleantech investment in India will overwhelmingly focus on bringing existing technologies to the Indian markets. Innovations involved, if any, can be classified as technology modifications, aggregating multiple technologies or business model innovation. Fundamental technology innovation remains rare, even in large companies. Only one India-based company presenting at the event, Carbon Clean Solutions, was based on technology innovation.

Large scale power generation and industrial/commercial energy efficiency dominate. Many 10-50MW solar power plants are being funded, supported by central and state governments intent on building up solar demand in large chunks. The CDM mechanism has provided additional revenue streams for both renewable energy and energy efficiency projects.

Green buildings (and related technologies), rural/decentralized power, and waste-to-resources (including energy, water and valued materials) are gaining momentum. GreenSpaces, Rehact, Barefoot Power, Sustainable Energy Solutions Afghanistan and Genesyst Ecotechnologies that presented at the conference fall in these categories.

Water, though acknowledged as a huge challenge, remains a hard nut to crack, for entrepreneurs and investors. (If you know of a company making money doing rain-water harvesting, give me a shout!!) WaterHealth’s CEO was at the event, but no other sustained success story comes to my mind in terms of providing decentralized drinking water solutions to rural poor.

Agriculture, a leading consumer of energy and water, is a sector that needs innovation in many pre- and post-harvest areas. But small farm size and counter-productive (and politically untouchable) government incentives remain key impediments. Incidentally, an India company Jain Irrigation made the Global Cleantech 100 list chosen from 60,000 companies worldwide. Representing the company at the event was Dr. D. N. Kulkarni, president “Sustainable Agriculture for Small Holders.”

“Lot of ‘dry powder’ is looking for investment opportunities” said several investors representing VC/PE firms at the event. But don’t expect a flurry of deals. Patience and pragmatism were in no short supply among those I talked with, given that global markets are just emerging from a severe cash crunch.

Global entrepreneurs are beginning to look for capital and strategic partners in India. Six of the eleven companies that presented at the event were based outside of India. While the Cleantech Group should certainly take credit for bringing them to Delhi, I think it does show that entrepreneurs now see India’s value both as a market and source of capital. The ones I talked with understood the importance of local strategic partners and connections to succeed in India.

Sustainability is Sound Strategy, be it Finance or Energy

Two common threads connected my conversations with friends and family across the world in recent weeks.  First, the fallout from the financial crisis, and the second, the future of cleantech.

Regarding the financial crisis, everyone expressed incredulity at the scale of the implosion, wondered how long before things get better, and almost everyone blamed the financial industry’s greed. But only a couple of friends, in my opinion, actually got the fundamental reason for this mess right: our collective myopia and tunnel vision.

There is nothing wrong with greed. After all, to be human is to be greedy. However, simply for self-preservation, we needed to consider our actions in the context of the larger ecosystem and in the longer term. Such a consideration of “sustainability” of their actions would have kept consumers from buying over-sized houses and banks from trading AAA-branded subprime mortgage bundles. But, alas, that was not to be.

The second common topic of discussion was the future of cleantech. The questions asked were varied: Will solar survive? Can developing countries like India afford cleantech in this economic downturn? With oil so cheap, why stress the industry with tighter energy efficiency standards?

The answer is simple: Sustainability is sound strategy, be it in finance or energy. If we ignore the long-term, ecosystem-wide consequences of how we generate and use energy today, we will be guilty of myopia and tunnel vision, not different from what precipitated this financial crisis. Only, the consequences will be far worse and our ability to correct almost none.

For we are faced with two undeniable trends (despite current economic hardships): 1. Growing energy demand driven by developing economies and urbanization; 2. Climate change as a consequence of green house gas emissions.

Hence, a “sustainable” approach to energy must incorporate two ideas: Energy Efficiency and Clean Energy. Many argue that we already have the know-how to do the former, and few dispute the necessity to continue innovating for the latter. In 2008, even the oil industry came on board with this reality.

So cleantech is here to stay. And nations and businesses that embrace it will be the ones that come out of this downturn stronger and ready to compete in the long-term.

Framework to evaluate factors affecting cleantech enterprise in India

As I suggested in the previous post, India is vastly different from the US in its cleantech needs as well as the conditions that influence cleantech enterprise. These differences manifest themselves in the nature of innovation, the appetite for entrepreneurship or even the nature of industries that constitute cleantech. To elucidate these and other factors, I thought up this “Ecosystem for Entrepreneurship” framework illustrated below in the graphic.

Nothing new here, of course. In words, this picture says: assuming there is a true need, an entrepreneur can bring an appropriate innovation to market only with the right resources (human or otherwise), capital, industry conditions, and regulatory support. Since, these factors are interlinked and interdependent, I admit they are not mutually exclusive. However, if we examined carefully, they are collectively exhaustive.

Next up: Cleantech innovation in India