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Is Renewable/Cleantech Energy sector losing its “Shine” in India?

Monday, May 2, 2011 Leave a Comment

This question often pops up when we are dealing with any new sector. "Is the dot-com really burst?", "Will the nuclear power plants go under new fission processes after the Japan debacle?" so on and so forth. While the dot-coms came resurgent after 1999-00 bubble burst, it was primarily attributed to the Web 2.0 and the companies that surged learning from the mistakes of others. The cleantech/ green/ sustainable/ renewable energy are running on a similar line. Its called the "industry cycle". So in which phase exactly is the cleantech industry?
The number of companies which can take in the fresh in-flows of capital through private equity and venture capitalist players is very less. Many investors feel concerned of smaller players trying to enter without any prior experience. According to Cleantech Group, VC and PE funds invested $816 million in fiscal 2011, compared with $828 million in last year. This comes as a surprise as the economic scenario is particularly improving in most parts of the world. Indian companies needs to build in internal efficiencies and operational effectiveness to bring down their costs and enter in newer untapped markets.
To add salt to the wound, many companies are backing up a bit after very aggressive plans. Google recently declared that "Renewable energy is long-term effort". I am not sure what to read in between the lines, but then one thing is for sure: Renewable needs a different approach to handle project and technology improvements. The government is doing round of revisions of targets without any major policy changes in India. It can support the project by providing wind velocity and density, DNI solar irradiation data, etc. The different state and central departments needs to be revamped for providing these and related data at a price or for free. This data could help the companies to cut down the initial costs of identifying the sites for projects by conducting their own feasibility studies. The companies in turn need to showcase that they have positive EBITDAs and Net Profits to make the investor world make believe in the them and hence, the cleantech sector.
What do you feel needs to be done by companies to improve their worthiness for the investors?
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