Micromax Energy Ltd is a part of the 15-year-old Micromax Group with a focus on solar energy in India and the aim to become a leader in this segment. Sudeshna Das, senior executive editor, EFY Group spoke to Mukesh Gupta, founder and managing director, Micromax Energy Ltd, to understand the vision of the company, which is to improve the domestic value chain while offering customised and economical solutions in the solar PV segment, and to establish the brand Microlyte in the market.
A focus on solar power
Over the last three years, the costs of solar energy generation have come down drastically, while electricity generation costs are consistently increasing, not to forget the environmental hazards that are associated with the latter. The opportunities in the solar sector are vast and the overall benefits are unparalleled; so we took a step forward. We also found gaps on the technical front. The products currently available are sourced from global companies that operate in developed countries where the grid conditions are very stable. Consequently, the products are designed keeping in mind such superior field conditions. But, in India, the grid conditions are not stable, and hence the products could not deliver power as desired. Being an electronics company, we have devoted our experience to filling these gaps. Under the brand name Microlyte, the company produces solar modules, and develops modern and highly efficient solar string inverters.
Leveraging government policies
The deciding factors for investing in the solar industry were the business opportunities as well as the taxation process for the industry. Many of the available subsidies are essential for our multi-sector investments. Solar power is an area where the government has given a lot of thrust—investors have been given the opportunity to enjoy up to 100 per cent subsidies in this sector. We plan to use these for the benefit of the business as well as the industry.
The Indian government’s aim of producing 100GW of solar power by 2022 has opened a massive window of opportunities. Each day, new players are stepping into the market, which is undoubtedly a boon for the industry. The survival of these start-ups necessitates the production of quality products at reasonable prices, which will benefit the end customers. A company with a strong vision and technical background will definitely survive. Every new entry in the solar sector will help us grow faster and our team will assist the beginners to understand the business. We are educating hundreds of our dealers who are scattered across the country. We own a channel through which we can also help them set up their units. Besides this, we are also focusing on inverters. And we are looking for new partners for other accessories.
Initially, we were sceptical, thinking that only big players could operate in the sector. But as we started expanding, we realised that not only can medium and small scale industries thrive in the solar sector, but even owners of individual houses. The technology is scalable as per benefits and at the level of the common man. Yes, such is the industry we work in. It is a little different from other industries for it does not involve just the simple product selling that we do for other goods.
Advice to budding entrepreneurs
If they have a technical and financial background, they should go for a complete solution for end customers. This industry is semi-developed and until and unless new innovations come out, it won’t be considered a full-fledged industry. So those who want to set up a proper business should come up with big plans backed by expertise.
Investments at a glance
We are going to set up a project of 5.28MW in Rajasthan’s Bhilwara area, and many more such projects are in the pipeline. We will be completing 20MW of solar power generation by the end of March 2017. Micromax has been been providing necessary support to the installation partners. We plan to import the products necessary for the initial 10MW of solar power. Once these are successfully installed, we will use in-house technology. After this, we will perform a comparative analysis based on the grid’s synchronisation and, accordingly, strategise a roadmap for the kind of products we should bring in, which will benefit the masses as well as us.
Technology and innovations are all about the cost to the end customers. These costs can be slashed with the help of two factors—reducing the cost at the component level and the efficiency or the convergence power of the system.
Earlier, the purpose of inverters was primarily to store energy. At that time, the battery was being charged from the direct AC source only. In the second generation of inverters, power was stored directly through the solar panels. The purpose was to store the available power of the solar panel in the battery and, in the absence of mains power, that stored power would be used as a backup source.
The third generation inverters tend to generate power in sync with the grid without any battery backup, which leads to lower electricity costs. Due to the constant innovations happening on this front, the cost is expected to come down even further. The third generation products will soon become popular in domestic markets.
The cost of electricity today for domestic consumption is around ₹ 6-7 a unit while that of solar power is around ₹ 4. This allows customers to cut down their electricity bills by about 40 per cent every month. But a limitation is that this technology will work only if the power is available. Power cuts will render the product non-functional. Keeping this in mind, we are coming up with a new technology, whereby the product will continue delivering even when power is unavailable.
Nowadays, companies are either setting up power projects or setting up industries to supply products to power producers. In the solar industry, companies do not have all-round knowledge about the products. In our product range, we intend to offer a complete solution. So we want to put ourselves in a category in which we will be able to give complete support to our customers and do more installations.
In our 25 years in this trade, we know of more than a 100,000 dealers in India who want to enter the solar business, yet have no proper technical knowledge or expertise related to the sector. This drives us to produce technology based on Indian power conditions and contribute to educating these smaller dealers—training them to install our complete set of panels, inverters and batteries. Therefore, on the one hand, we are providing a complete solution for the mass market, starting from small end users to domestic customers; and on the other, we are providing good business opportunities to those 100,000 dealers who have been selling inverters and batteries for the last one or two decades. In other words, it’s a win-win proposition for any trader associated with us.
By March 2018, Micromax will be completely indigenous. We will be doing everything in-house to reduce the cost of production. We are developing our products in sync with the present grid conditions in India, and so we are modifying and testing the products accordingly, which means the overall solution’s cost to the end customer will come down.
Strategising the growth path
Micromax is entering the solar sector with the goal of building an ecosystem. Apart from having four factories in India, we want to expand further with the aim to support the ‘Make in India’ initiative. We are working on technologies that are suitable for India and, in the process, we want to educate all our channel partners so that the end customers get the maximum benefits. In the introductory three months, we want to educate customers on the perks of investing in the solar industry. We have had a pan-India distribution network for the last 25 years, which covers nearly all the districts and states. Our entire distributor channel will be set up by January 2017, and then we will aim to expand to rural areas.
The roadmap ahead
We have started manufacturing solar inverters in India and will get into full-fledged production from March 2017. As far as the backup for this project is concerned, the cost of panels, which accounts for 70 per cent of any solar installation, has already come down in India. But if you talk about the raw materials used in these panels, these are still imported from China. A lot needs to be done in that area, though a few industries have taken the initiative to set up factories for making the panels in India. As far as the complete solution is concerned, it basically consists of three parts – the inverter, the panel and the battery.
Most of these are already being manufactured in India. A few big industries will probably put up factories in India. So, in 2018, as far as product solutions are concerned, it should be all about ‘Making in India’. Being inverter experts, we feel we can do a lot in this area. I believe that we will see a lot of changes in the next one-and-a-half years, but as far as assembly is concerned, it is already happening in India.