‘Solar Has Gone From Niche To Mainstream’: Orb Energy CEO Damian Miller

This week on The Core Report: Weekend Edition, financial journalist Govindraj Ethiraj talks to Damian Miller about the growing market for solar energy in India

22 Jun 2024 12:30 AM GMT

The Indian government introduced a rooftop solar subsidy scheme for households in February this year, with a total outlay Rs 75,021 crore. This came ahead of what would be one of the hottest summers the country has seen and the country’s power demand reached all-time highs.

Even though the country remains heavily dependent on coal-based power, solar is now getting its turn in the light. Solar has gone from being niche to mainstream in the last 17 years, Damian Miller, CEO and co-founder of solar provider Orb Energy told The Core. Miller, who previously worked at Shell Solar, started Orb Energy in 2006 in Bengaluru after Shell shut down solar operations.

After the subsidy scheme for homes was announced, there was a huge jump in residential demand, Miller said. The subsidy reduces payback periods from six to seven years to four to five years. Gujarat and Maharashtra have taken over Karnataka to lead as residential markets for solar energy, he added. Orb Energy largely works with commercial and industrial sectors, which were the initial adopters due to higher grid electricity tariffs and faster payback periods (two to three years without subsidies).

“I think solar is the most exciting energy source for India by far…I would expect by 2060-2070, more than 50% of India's electricity will be coming from solar,” Miller said.

For The Core Report: Weekend Edition, financial journalist Govindraj Ethiraj spoke to Miller about the growing and diversifying market for solar energy in India.

Edited excerpts:

Damian, thank you so much for joining me. I know you're joining me from Bangalore, where you are headquartered. What brought you to Bangalore, and how long have you been there now?

I've been in Bangalore now for 17 years. What brought me to Bangalore, other than the great weather, was the fact that at that time, I was working with Shell in their solar division. I'd been there eight years. And in 2006, Shell took a decision to stop their solar operations. They exited the solar industry. And myself and my colleague in Shell, we saw an opportunity to take the business forward in India.

What was the market like at that time in 2006 in solar power generation?

Yeah, that's a very good question. I think the starting point for that is that in terms of rupees per watt, a solar panel at a wholesale level would have cost you somewhere between Rs 160 and Rs 180 per watt. Today, if you want to buy it at a wholesale level, you're probably going to be buying it at about Rs 15. So there has been a huge decline in the cost of solar technology, which has obviously opened up new segments and opened out the market.

What did you start with when you launched in 2006?

Because the price was quite high at that time. We launched in what was called the off grid market, because that was the only market that existed for solar then. And that meant the market where people had basically very unreliable power. Many people had a connection to the grid, but it was super unreliable. And so that took the business out into more tier two towns and cities, and it meant that we were often in very rural areas as well.

And we, as a company, to service that market, probably at our height, we were at about 170 branches spread across five or six states, serving predominantly the residential market for backup power as well as solar water heating.

What was your first installation, and where was it?

Well, I mean, our first branch that we opened was in Uttar Kannada, which is just the northern part of Karnataka, on the coast. So we were in a tiny little town called Kumta, and that's where we opened the first branch. That's where we did our first installations in 2006.

And that should not be too far from Goa, if I'm not mistaken.

Yeah, correct. But a very different market. It's not the Goa market, it's very different.

And how have you grown since then?

Yeah, we've grown…everybody who's been in a startup knows that as you're in a startup, it pivots over time. So we have pivoted with the market over time. In around 2012-13, the government, at the time, the Congress government, introduced the National Solar Mission that led to net metering in states like Karnataka, where we had our largest presence.

And net metering meant that not only now did off grid solar make sense, but also on grid solar made sense. This was coupled with, after the financial crisis 2008-2009, there was a big decline in the cost of solar panels. It had gone from Rs 180 down to about Rs 40-50 per watt. And that, combined with net metering, meant that large residential installations emerged, small commercial and industrial installations emerged, and we, as a company, really started to pivot on grid, away from off grids.

We also saw at the time that the off grid market was declining. The grid was getting better. As the grid got better, it was natural for solar to shift from off grid to on grid. And also at this time, the cost of solar started to make economic sense in terms of comparison with grid prices. And that was a total revolution, because historically, solar had always been much more expensive than grid electricity in India.

Can you explain, for those who may not follow, what exactly is the distinction or difference between on grid and off grid?

Sure. Off grid is where you're not connected to the electricity grid in any way, you're not interacting with the grid. You have a battery as backup, and so it's often called ‘behind the metre’. So you're not interfacing with the metre in any way, you're not getting any benefits of sending power back into the metre. You're just using the solar power that you generate. You store it in your own battery and you use that at night or during the day as you wish to power certain loads in your house or your business.

When you go on grid, you connect. There's an interaction with the metre. You have to get approval of CEIG as well as the discoms to connect. There is a policy framework that governs that. And so you use a different type of inverter to synchronise with the grid. And then you have an interaction where you can consume the power you produce, but if you're not consuming it, you can also sell it back into the grid.

And so at the end of the month, under net metering, the government, or the discom, takes a look at how much power have you produced and how much power have you used. If you have used less than what you produce, then you get a refund from the discom. If you have consumed more than you produce, then you only pay the difference between your consumption and your production. And that, in essence, is net metering.

I'll come to the institution in a second, but since you mentioned it – I've seen this in some homes in Bangalore, and I know that people are now pumping electricity into the grid and netting off, as you said. Now, that's one place where it's working. Does it work in any other state in this form?

Yeah, absolutely. It works across India in this form. Net metering has become quite commonplace across almost all states in India. Karnataka was a leader at that time under the National Solar Mission, but it's become commonplace. And, for instance, our big markets are Karnataka, Andhra Pradesh, Telangana, Tamil Nadu, Maharashtra, Gujarat, and even into the north of the country. So it is widespread now.

Let me supplement that question. Do you see people doing this as, let's say as much as you see in Karnataka now, as in, are there lots of homes in these other states that you mentioned, or as many homes?

The leading states for the residential market, since we're talking about homes, would be Gujarat and Maharashtra. Karnataka is not at the same scale as those states in terms of residential connections at this stage.

So these states have obviously overtaken Karnataka because you said Karnataka used to be a leader at one…

Yes, yes. And I think they've responded particularly well to the introduction of the subsidy by the Prime Minister for the residential market…

Which is only, I mean, only about six months old now?

Yeah, correct. It is having a very big effect on the residential market. I mean, for us as a company, we used to see, I mean, we became primarily a commercial and industrial rooftop company because in India, compared to other countries, the commercial and industrial electricity tariff for the grid is higher than residential.

Often in other markets, the residential is higher per unit than the commercial and industrial. But here there's a cross subsidisation that takes place. So it was very natural for the commercial and industrial companies to be the first to adopt rooftop solar because they had the biggest benefit to do so. They also had the cash to do so. For a long while the residential struggled, the payback was quite long and customers weren't interested. Payback used to be six to seven years, even last financial year. And now with the subsidy, it's more like four to five years. And suddenly there's a big increase in attention.

And I'm going to come back to residential in a moment. When we say rooftop in buildings or commercial complexes, I'm thinking, for example, Cochin airport or Delhi airport, I mean, these are the really big ones who have installed and obviously seeing the benefits of it. Some of them are saying that almost all their electricity needs are being met by their captive rooftop solar panels or systems.

Tell us about that, first of all, am I on the right track? And then what else have you been seeing and have been doing?

I mean, those are the high profile visible ones when you're taking off from an airport, right? So it's understood. But we as a company, probably our strength is that we really serve the small and medium establishments (SMEs). That's where we find the biggest uptake from our customers. And that we've served thousands of SMEs now, across India with rooftop solar.

You may not see them because they're not as visible as you're moving around the country, but industries and commercial and industrial entities across India are adopting rooftop solar because the payback now for a commercial industrial user is two to three years payback, which is an unheard of, unsubsidised payback. Let me be clear. The commercial industrialised sector is not subsidised. It doesn't need a subsidy. It works purely on commercial terms. It is a no brainer for any industrialists in India today.

And that's so you will find, if you go around, you will find a lot more rooftop solar than you can necessarily see from the car. And we have serviced…I mean, we have some rooftops complexes for one industry that went up to 7MW, which is much bigger. It's three times bigger than what you see in Cochin. So it just depends on the SME you're dealing with. We also deal with SMEs who just need 10 or 20KW, if they're a petrol bunk. So just we service all of that. And the demand across the whole SME spectrum is huge right now.

And what's the seven megawatt installation? I mean, what is it powering?

It's an entity called Klene Paks. And I think it was put on about three or four different factories of theirs. It basically produces the fertiliser bags that you see around the country. They're thickly woven plastic fertiliser bags. They're the leading producer of that. They cut their electricity bill, it's a high energy intensive unit. They cut their electricity bill by 40%. We have other entities that might not need as much power, like a KIA showroom that has cut their electricity by 100%. So it just depends on what the entity is and how much power they need.

So you're saying that the fertiliser bag company consumes about 14 to 15 MW power on a running basis, of which roughly 40% is what the panels are providing right now on a good day.

Correct on a good day. On average. I mean, that's an average production unit. When you talk about 7MW, that is what it will produce on average over the year.

Right. What would be the average size of an installation, since you said seven megawatt is large and you said there are smaller SMEs whose needs are smaller. But what's the average size?

What's the kind of industry that you find them usually servicing? Or what's the kind of industry that usually comes to you or has been coming to you? And third, give us a sense of the costs, particularly the upfront capital costs.

So we see that the average size is roughly, in terms of rupee, it's about a crore. That's the average SME price tag that will deliver somewhere around 300KW. Often people talk in kVA. So 300KW, equivalent to kVA. That is in terms of the type of SMEs we serve.

Broadly, if you take a generic title like manufacturing, the manufacturers of anything from, like we said, plastic woven bags to auto components to die cast, there's so many manufacturers that you find in India. I mean, 40% of India's industrial output comes from SMEs. So we cover that full spectrum of manufacturing SMEs. And that they, like I said, the average size will be about one crore ticket size amongst those SMEs.

The one crore is the upfront cost to set up panels, all the wiring, the inverters…and not the storage, I'm assuming?

No, correct. Storage. Once you have net metering, the grid basically acts as your storage. You pump power into the grid as you don't need it. You consume from the grid as you need it. It acts like a battery.

Now that said, over time, we think as storage costs come down that then you might see SME customers, commercial and industrial customers, also adopting batteries to reduce their consumption from their diesel generators. That's the next phase of growth as lithium batteries decline in cost.

For most of your SME customers, or those you've supplied in these installations, how much would the solar panel output be in terms of or in proportion to their overall, let's say, their consumption at this point?

Yeah, it's a broad spectrum, so you have to work with averages, and the average tends to work out as 40% to 50%. I think what a very interesting new segment that has emerged for us are those customers who adopt rooftop solar, but they find that because their energy needs are so high, that they can only get about 10% or 15-20% of the electricity they need from solar because they have electric furnaces. So think about foundries, precision component companies.

They need electric furnaces to melt metal and pour metal. So those guys then need to go off site. And so we've also started to do a ground-mounted solution for SMEs, where we'll set up, for instance, in Arsikere area, just outside of Bangalore, we've set up 35MW on the park.

And then SMEs come and they buy a portion of that, much as you would buy an apartment in an apartment building. They can come and buy a two megawatt array, and that will probably be about 10X bigger than their rooftop system, generally, on average. But it's a great way for them to also get the benefit of solar off site, in addition to rooftop solar on their facility.

Can you explain how that works again? You have a ground mounted solar park, which is somewhere else. So I go and commit to a certain amount of power that I will buy from it. And then..

No, actually, we do a different model. We don't ask you to buy the power. We don't remain the owner of the asset. If you're the SME, we encourage you to buy a sub array. So if the unit is 35MW in Arsikere, we've served about 15 SMEs with that. So they've all bought about a 2.5 megawatt, roughly give or take a sub array. They own it. They own the land under it. We sell them the land under it as well. They then can take the accelerated depreciation benefit which exists in India — For those companies that own solar and are profitable, they can take that benefit and then they produce the power and they can offset that power against their electricity bill.

The beauty in India, I think one quite revolutionary, and certainly I don't see, as I move around different parts of Asia and Africa, I don't see a lot of other countries that have it so clearly functioning but that is the policy of open access. Open access in India means that you can have a unit producing power off site and take the benefit of that against your electricity bill on site. And that's opened up a huge market in India for SMEs as well as larger corporates to go offsite to get the power that their rooftop wouldn't have provided them.

For instance, Arsikere is obviously in the same state, so the power is being generated there. My plant may be in South Karnataka or North Karnataka, but I can get that benefit. Does that work?

That's how it works exactly within Karnataka. We think over time that will emerge to allow for interstate transfers as well. But at the moment it is state specific and it can work across the four or five different discoms that exist in Karnataka.

Right. And how many days are you currently seeing, you know, in terms of, let's say, the good sun days and full utilisation? And how does that vary today in India in the parts that you're active in?

Sure. I think the best way to think about this is…in the industry, we talk about how many units of power are you getting as a user per kilowatt installed. So when we typically, what you see is like, say, Karnataka, Maharashtra, Tamil Nadu, across Andhra Pradesh, Telangana, those markets, you know, you can pretty much guarantee that you will get about four units of power for every kilowatt installed. Now that four units in the monsoon months might become two and a half to three units, but then in the months of January, it'll shoot up to five units. So you'll see over the course of the year that your average that you get will come out as around four.

Manufacturing plants obviously need consistently continuous power. So how do they manage with these kinds of variations? And to what extent are they normally able to, let's say, invest? For example, if my need is 1MW, how much would I invest in solar? Because I know that solar is not going to be there all the time and therefore I'll need to rely on the grid once again or diesel genset back or something else.

Sure. It all, obviously, like we said earlier, it really depends on your consumption; where there are some entities that we serve where we get 80%-100% consumption of solar from their rooftop. It just depends on the size of your roof relative to the electricity demand you have.

But let's say you're what you want in 1MW, it's going to give you 40% or 50% of your power needs. It'll cost you in this market around three crores for 1MW. Give you an idea, it's about Rs 30 a watt for a megawatt. For smaller systems, it'll be a bit more. So for 1 MW... So then you come to the point about how do you manage between your solar and the grid, really, it's seamless. It's very seamless. You simply use more grid power during the monsoon months, during the heavy, sunny months of the peak sun months of January to April, you use more solar.

The beauty is that with net metering, even if you have a day off, you're producing power and you're feeding that into the grid, and you can net that off against your electricity at the end of the month when you get your bill. So once you have net metering, those fluctuations work. You know, they work. Of course, it's more for the utility in India, as more and more solar comes online, to manage those fluctuations and to make sure there's never, because they'll get spikes in solar production and they'll get drops in solar production, and then they have to have other sources of electricity that will kick in, and that's where large scale storage will start to help utilities balance their grids over time.

In terms of how you manage the cost, one of the things that we bring to the table is a company that is totally unique: If you're an SME, we will finance you off our balance sheet for up to five years. If you've got a really good credit rating, a good track record, we can give you 0% down payment. This is something you won't find.

I mean, we do work with SBI. And we do work with SIDBI, and they will give you better interest rates than us, but you won't get the same. They will ask for collateral, they will ask for a higher down payment, and those things will. Yeah, those things. It's a choice for you as an entity, whether what's important to you.

But in commercial, you're saying that there is no subsidy, but there are subsidised loans. Is that correct?

In commercial, there's not. I don't know whether you can call them subsidised loans. I don't want to say that because I don't know what SIDBI or SBI do…SIDBI might come in around 6 or 7% interest. State Bank of India will come in around 8 or 9% interest. We. We have a fixed rate of 12%, but we don't ask for any collateral. We don't ask necessarily for a down payment and we can get it done in seven to ten days. So it's just a very different proposition for you and every SME has a choice. Most SMEs are quite interest rate conscious, quite interest rate sensitive, but some SMEs are more conscious and concerned about their collateral.

Right, and how many installations do you have currently on that you've already put up in the last decade or so?

So basically we've done, if you look at everything we've done, I think now the latest estimates, about 170,000 installations if you take all the residential and off grid systems we did in the early years. If you look at our C&I (commercial and industrial) PV installations, we have about 1500 C&I PV. We've done more than 300 MW rooftop installations, mostly for SMEs.

In addition, historically, commercial water heating has been a big part of the solar industry. We've done more than 10,000 of those over the years. So we have a big base of SME customers, and a big base of residential customers. And you know, our aim always is to really make sure that the customer base is happy and is giving us good referrals to the next customer.

And the 170,000 installations, how much energy do they cumulatively generate as an approximate figure?

Well, if you look at 300 MW installed and you take the average of four units per day, you're talking about 1.2 gigawatt hours a day on average.

Got it. Okay. And what's the servicing requirement and how are you managing that?

The first thing to say is we have always, as a company, taken service hugely, seriously. It's a core part of our business — in a way, that when we started, when I first started looking at the Indian solar market, even back in the mid nineties, there was always…service was an issue.

So when we set up the company here.. first as when we were with Shell, and then subsequently as Orb, service was key to us. And so we give three preventative maintenance visits in the first year. And we think that's really critical because any customer has to get used to how solar works, just the dynamics of it, how the inverter works. And there will be issues, there will be questions. So we come out three times to see you in the first year and we don't ask for any money and we just schedule that preventatively.

That obviously has a cost, but we think that's a cost that's worth bearing as a business to establish a rapport with the customer, to make sure customers are happy, to make sure systems are functioning and that's very critical, you know. So first preventative maintenance is key.

That said, when you start to turn to solar systems that don't have batteries, there's not a lot that can go wrong. Your main issue is then really your inverter. We make our own solar panels here in Bangalore. We don't buy from China, we make our own and we see that the panel pretty much is 100% solid. Very few issues with our panels.

The inverter, they can take a, it might get a surge of electricity from the grid. It might, you know, burn the inverter. But the inverters are warrantied from anywhere from five to seven years. So as long as it's not the customer's fault or the wiring in the…pre existing wiring in the factory, the customer has a warranty for that. That's your main service area.

The other area for service is…cleaning is critical. We shouldn't say it's funny, but I don't understand it. Somebody will invest a crore in a rooftop system, like say, an SME. They'll say it's critical to reducing their electricity consumption and becoming more competitive with their partners in the industry or in their competitors in the industry. And then you come back a few months later and it's covered with dust and it's not been cleaned. And they have assured us that they have the staff that will clean it and it just becomes. I think it's about habit. There's not been anything on the roof before that needed cleaning. We do offer a cleaning service, but I think sometimes your customers can be a little bit too focused on the pennies and not on the pounds, as you say.

So it's a battle to get them to sign up to our cleaning. Increasingly we see that's happening because if you just clean regularly, I mean, it makes the cleaning cost absolutely irrelevant. You maximise your power production. So cleaning, I cannot, especially, as you know, in certain times of the year in India, it's quite dusty. You must clean the panels to maximise production. It's an absolute must.

Right. And you said that three years is what it takes for some of these, let's say, at the median, for companies to recover. So if I put a crore for 300KW, or let's say three crores for a megawatt, in three years time, I would have recovered that and 40% of my electricity bill is gone.. Effectively

When you say gone, and the other way of thinking about it is that 40% is free electricity. It's free going forward.

Right. And if that's the case, do people find this compelling enough to invest more or I mean, how do people see it? I mean, what's the value?

I think when you talk to a proprietor, and these proprietors of SMEs are incredibly sharp because they cover all parts of their business. They know the finance side, they know the technology side…they know all aspects of their business. What you see is they often look at, especially those, let's say those who have cash they'll say, okay, I could put cash in my bank. It earns, you know, what a best case, 8% or 9% on a fixed deposit. Or I can put it in this, and it shows a return on investment, or somewhere between 20 and 30%. In that sense, it's a no brainer. If you've got cash where you should put it, you should put it into solar. And then obviously, when you have finance and you add the cost of finance, the return might come down a bit, but it still makes absolute sense. So I think that is the way that people typically see it.

The reality, however, in our day to day, is that businesses, whether it's a corporate or an SME, they have other priorities, they have other capex needs. They need to invest in new machinery for their core business. And when that's happening, then it's very hard to get people to think about, okay, let me just add a whole bunch of capex for my rooftop. It can just be hard to get the focus of the proprietor or the directors or whoever it is that is making the decision.

And I think that's our biggest competition. We often say our biggest competition is not the grid, it's not other solar companies. It's just the priorities of the business. Does it allow, do they have the bandwidth to allow for the solar, to take that solar decision and give it the time it needs to make a decision?

I mean, since you mentioned other players, how competitive is the market? Or is there enough demand for anyone, and therefore people come to you relatively more than you going to them?

Well, look, we've been around 17 years, and so we have quite a good footprint in the market. So people do come to us, and I think we have a very good track record on quality. So that quality speaks for itself. Our main source of business is word of mouth customer referrals, which is really something I'm proud of, and I think it's key to our business. So that's the first point.

There is competition. I think the best way to see it is like this. In rooftop solar, there are quite low barriers to entry. Anybody in a small town like Kumta, we said we started in Kumta…anybody can set up a small integrate, be an integrator in Kumta, buy some modules, buy some inverters, and go and service solar for local industry. So it's not that you will get the same quality from a local integrator as from us. You might, but most often you won't. It's that local integrators will put a price into the market that's quite low to pull down the prices for everyone else.

So it's quite competitive in rooftop solar on price. It's low barriers to entry, quite a lot of players, quite a fragmented market. So we have to, that's why we position ourselves as having high quality, we add extra services, we add finance, so we're able to attract a better price and a better margin and so hold our own ground in the industry.

If I were to use an analogy, you know, you had, let's say the Dells and IBM, now Lenovo boxes, and then at least in India that I'm familiar with, you had small assemblers who used to put together the same boxes because finally you could say, okay, I want an intel, this chip, and I want that hard drive. And it all comes together and it seems to do the same thing except that the box always would look unwieldy.

And if I went and bought a Dell or an HP, it would look slicker. And obviously there was service and so on. But is that a good analogy?

Sort of and sort of not. I agree that if you go to an integrator, it might look a bit more boxy and a bit more ugly. But you also, there'll be some issues you want to be careful of. Like the cabling they use, both the cabling they use and then you want to put the cabling inside an enclosure.

We use, for instance, powder coated cable trays, whereas a lot of guys will just use plastic PVC tubes. The rats will lead through the PVC tubes, they'll eat through your wiring. You're going to have issues. So you need to, you don't want to go too cheap on how you handle your cabling. Same with your inverters. You have to earth them properly.

We spend a lot of time doing that earthing properly as part of our installation. Then your inverter will fry and your inverter will not have warranty. Same with lightning arresters. You have to have a great lightning arrest or else you can find your whole system, you know, is gone. So I think they are very critical and also how you do the wiring prevents voltage drops.

Because this thing sits on your roof on a warrantied basis for 25 years. I want to be clear, I don't think we've touched on that…We warranty a solar panel for 25 years. Your payback is in three years. You have 22 years of free electricity after that warrantied and it's still going to go on after that. I think I would always pay a tiny bit more and I'm just talking about a tiny bit more to get a high quality installation that's going to sit on my roof for 25 years than to go cheap.

What does the warranty cover?

It allows for a slight degradation of the panel. So after 25 years, if the panel in any year, I think it's something like 0.8% degradation. If it's not producing that output, we have to give you additional panelling or money to make up for that difference. So it covers the power output of the panel such that after 25 years you should be getting, or you must be getting 80% of the rated wattage of that panel in that timeframe. So it just means that if you're getting, you're only getting 75%, we have to make up the additional 5% for you after 25 years

Give us a sense of what your experience has been in rooftop for homes so far. And you did say that Maharashtra and Gujarat have seen a big spike in the last six months. That's quite interesting in itself. That obviously follows the New Solar Mission that the Prime Minister announced. I think it was January 23-24th. So how has that been? How are people using, what's the payback like for that segment?

Yeah, I think there's no question that because as we said, the tariffs for residential customers in India are typically lower than commercial and industrial tariffs, that there has been a disincentive for the residential customer to buy solar over the years. The payback, (as I said, we've seen say in the last five years before the announcement) was sitting somewhere around six to seven years… Payback for a consumer, unless you're very oriented towards sustainability, green energy, you probably wouldn't have done it. Then with the subsidy and with the recent decline in module prices also globally, you now see the payback is sitting between four and five years. So suddenly there is a really keen interest from the residential customer to do this.

I think the other beauty that we see with a lot of residential customers is that they can make an investment, again, it's a 25 year investment. And because a lot of, say it's a standalone home, has a decent sized roof that they can accommodate 10KW. You can literally zero out the electricity bill. You can literally make your electricity bill zero because most people in India, the electricity demands are still relatively low. One or two ACs, a fridge, you know, it's quite reasonable compared to a big mansion in the United States, right. It's just a different consumption level of electricity. So people can really zero out their electricity bill in residential. And I find that, and that is extremely attractive. That's a very attractive proposition.

And you're saying for an average installation of yours, it's able to power, let's say one air conditioner apart from let's say the running stuff like refrigerators and so on.

But I want to be clear, Govind, it could do anything. It can. I mean even if you have ten ACs, then you'll just, you'll use a mix of the grid and solar, and you'll just use more grid than solar. So then you'll probably just offset 20% of your electricity bill…30%. But if you're not using that much AC and you've just got your fridge and your TV and you know, the lighting and fans. Yeah, you can, and you've got a decent sized rooftop, then you have a chance of, you know, offsetting 80% to 100% of your bill.

And there's something that I should have asked earlier, but what's the peak time utilisation in India? And I'm assuming it's roughly the same across the country, but from what time to what time? And then does it fade off?

You see most of the requirements kicking in for residential, obviously, in the nighttime, the morning time, and then during the day, it's less. And that's the beauty of net metering, because even during the day, everybody's out, they've gone to school, they've gone to the office in the house, it's producing power and it's feeding into the grid. And then you're off setting your bill at the end of the month. So you don't have to have a battery to get that benefit of the grid. Smoothes out the net metering, smoothes out those peaks in those troughs.

Right, but, on a normal day, the solar panels could be generating till 06:00 p.m. 07:00 p.m.

It depends on the time of year. The sun rises earlier this time of year than it does, obviously, in December- January. It's set later this time of year than December-January. So what you can expect, I mean, the peak output is always around 10:00 a.m. to 02:00 p.m. that's your peak. That's the strongest even to three. But, you know, but you're still generating power.

And you'll see, it'll look like a bell curve. It'll ramp up like this and then it'll come down like this during the course of the day. And, and then obviously at night, there's nothing.

Right. Last question. As you look ahead, Damian, how are you seeing, you know, there are many other things going on at the same time. Temperatures are rising. People's need for, let's say, cooling will increase in homes and in industry. And that's quite clear now from all the projections. And at the same time, we want energy to be more sustainable and therefore are investing in it and indeed subsidising it as well by governments. So what's the near to medium term future looking like and what are the big trends that you're seeing?

Okay, so I think the big trend is just that solar has become, since I started Orb Energy back in 2006, solar has gone from being niche to being mainstream. So everybody now, especially since the Prime Minister's announcement, it's really heard about rooftop solar for the home. And certainly among industrialists, solar has become just everybody. And every industrialist that I ever talked to knows that solar makes sense. It's just about when they will do it, not if they will do it. So it's become mainstream in a very different way that I think is extremely exciting for India.

And if you look at the Indian economy and how it's projected to grow and the needs that India has, both for a forex reason as well as energy independence, I think solar is the most exciting energy source for India by far looking forward, over the course of India's growth trajectory over the next 20 or 30 years.

So I would expect by 2060-2070, more than 50% of India's electricity will be coming from solar. It will be that big in India.

What will drive it? I think actually, we already have the technology, we already have the cost reduction. We already have all the financing coming in place. So those key things that drive diffusion of a technology, they're in place. And now it needs to rip.

The next piece of the puzzle that will come that we discussed briefly earlier is storage. And what you see in other markets, for instance, the United States, is you have peak pricing for customers. So then you, as a customer can decide, hey, you know what? Right now, the grid is costing me a lot. It's 08:00 p.m. it's peak hours. Therefore, I'm going to use my battery that's filled with solar power that I generated as my electricity source. I'm not going to buy from the grid. And you start to have that interplay between the cost of electricity from the grid and the cost of electricity that you're generating from your solar system plus battery.

As you know, electricity in India is a big political hot potato. And the idea that now you're going to introduce peak pricing…is something that many consumers may not like, but it is the thing that will drive more solar adoption and more self-sufficiency with batteries as well. I think that's the next big evolution. The next big regulatory move will be that peak pricing of electricity and the introduction of storage coupled with solar to let customers decide when they use grid power, when they use solar power.

All of this is a profitable business for companies like you.

Yes, absolutely, we're profitable. Yep. Had a good year last year. So, yes, it is profitable, and it's a growing part of the business.

And when you say profitable, you mean. I mean no accumulated losses and profitable on an ongoing basis, right?

Oh, no. We might have accumulated losses because for many years, it was a challenging sector. But I think what has changed now is that we are seeing very good profits that are eroding those accumulated losses very quickly. So I think within another year for us those are gone and it's just a very different order magnitude of volume now.

And I think your key if you're running a solar business, it's that investment of time and energy into building your reputation, into executing well at a high quality level so that you get decent margins, decent pricing and then you have to keep your costs down, you have to keep your operating costs down.

And if you get, and for us, because we're well positioned, we're seeing good growth in demand, good growth in revenue, we're keeping our operating costs down. We have our own manufacturing that helps to keep the cost of goods down so we're able to get that a decent margin. That means now at these revenue levels where we're profitable.

Updated On: 24 Jun 2024 6:57 AM GMT
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