About Solar91 Cleantech Limited

BUSINESS OVERVIEW

Solar91 Cleantech Limited, founded in 2015 by IIT alumni, specializes in providing EPC solar energy solutions for Commercial & Industrial customers. The company focuses on reducing power consumption through renewable energy by building, operating, and maintaining grid-connected and off-grid solar power projects. Expanding its scope, Solar91 is transitioning to the Independent Power Producer (IPP) model, where it establishes 100% subsidiary Special Purpose Vehicles (SPVs) to own, operate, and maintain solar projects, generating revenue through Power Purchase Agreements (PPAs) with electricity distribution companies.

Starting with projects in Rajasthan and Maharashtra for Agro Processing and Textile industries, Solar91 has commissioned 191 plants across 13 Indian states and one in Kenya, achieving a total capacity of over 94 MW. The company has also executed two IPP projects since 2023. It caters to diverse segments, including Industrial, Commercial, and Residential Rooftop Solar, Open Access and Group Captive Solutions, Agro PV, and Distributed Solar Investment opportunities.

With a strong focus on distributed renewable energy, Solar91 has evolved from a turnkey EPC contractor to an IPP, aiming to capitalize on opportunities in India and international markets like Kenya. As on 30th September, 2024, the Company have a team of 81 employees. The Banker to the Company is Axis Bank Limited.

INDUSTRY ANALYSIS

Indian renewable industry
India’s installed renewable energy capacity is the fourth largest in the world. The Government is committed to increased use of clean energy sources and is already undertaking various large-scale sustainable power projects and promoting green energy heavily. In addition, renewable energy has the potential to create many employment opportunities at all levels, especially in rural areas.
India has low conventional energy resources compared to its required energy needs driven by a huge population and a rapidly increasing economy. However, India can harness the huge potential of solar energy as it receives sunshine for most of the year. It also has vast potential in hydropower, which is being explored across states, especially in the Northeast. India is the only country among the G20 countries that is on track to achieve its targets under the Paris Agreement.

As of December 2023, Renewable energy sources, including biomass, waste to power and waste to energy, have a combined installed capacity of 136.57 GW. As of March 2024, Renewable energy sources, including biomass, waste to power and waste to energy, have a combined installed capacity of 143.64 GW.

As of November 2023, Renewable energy sources, including biomass, waste to power and waste to energy, have a combined installed capacity of 132.69 GW.

India's installed renewable energy capacity is expected to increase to about 170 GW by March 2025 from the level of 135 GW as of December 2023, according to research agency ICRA.
India added a record 18.48 GW of renewable energy capacity in 2023-24, a 21% increase over the previous year.

Installed renewable power generation capacity has increased at a fast pace over the past few years, posting a CAGR of 15.4% between FY16 and FY23. India has 125.15 GW of renewable energy capacity in FY23. The non-conventional energy space in India has become highly attractive for investors and received an FDI inflow of US$ 17.88 billion between April 2000-March 2024.

India's installed renewable energy capacity is expected to increase to about 170 GW by March 2025 from the level of 132 GW as of October 2023, according to research agency ICRA.
As of February 2024, 42.25% of the total power installed capacity is from non-fossil-based sources, which fulfils the target of 40% by the end of 2022.

India was ranked fourth in wind power capacity and solar power capacity, and fourth in renewable energy installed capacity, as of 2024.

The electricity generation target (Including RE) for the year 2023-24 has been fixed as 1750 billion Units (BU). i.e. growth of around 7.2% over the actual generation of 1624.158 BU for the previous year (2022-23). The generation during 2022-23 was 1624.158 BU as compared to 1491.859 BU generated during 2021-22, representing a growth of about 8.87%.

Ministry of New and Renewable Energy targets 500 GW non-fossil-based electricity generation by 2030, as per the Prime Minister's COP26 announcement, with an added installation of 13.5 GW renewable energy capacity in 2023, corresponding to an investment of around Rs. 74,000 crores (US$ 8.90 billion).

Power generation from solar and wind projects is likely to be cost-competitive relative to thermal power generation in India in 2025-30. In the first half of 2022, India saved US$ 4.2 billion in fuel costs through solar power generation and 19.4 million tonnes of coal.
Power generation from renewable energy sources (not including hydro) stood at 22.41 billion units (BU) in January 2024, down from 25.79 BU in January 2023.

Power generation from renewable energy sources stood at 309.66 billion units (BU) between April-January 2024, down from 316.75 BU in the same period in the previous year. According to the data released by the Department for Promotion of Industry and Internal Trade (DPIIT), The non-conventional energy space in India has become highly attractive for investors and received an FDI inflow of US$ 16.26 billion between April 2000-December 2023.

Since 2014, the renewable energy sector in India has seen investments totalling more than Rs. 5.2 lakh crore (US$ 70 billion). As of December 12, 2023, India has installed 72.02 GW of solar power capacity, comprising ground-mounted, rooftop, hybrid, and off-grid systems, with significant growth since 2019-20. Private sector investment drives solar projects, supported by schemes for solar park development.

The Rajasthan government signed an MoU with NTPC Green Energy for 28,500 MW of renewable energybased projects, as part of the total 31,825 MW of power generation projects worth Rs 1.6 lakh crore (US$ 19.18 billion). This massive renewable energy investment is aimed at making Rajasthan self-reliant in the energy sector and significantly expanding the state's renewable power capacity. The installed solar energy capacity has increased by 26 times in the last 9 years.

In 2023, India has added 7.5 GW of solar power capacity. According to research by the Council on Energy, Environment and Water's Centre for Energy Finance (CEEWCEF), India's total installed power generation capacity reached 416 GW in FY23, of which 125 GW (30%) came from renewable energy (RE) and 47 GW (11%) comes from hydro.

According to Moody's, India will require US$ 190 billion-US$ 215 billion of investment over the next seven years to achieve the target of 500 GW of renewable energy capacity by 2030, and another US$ 150 billionUS$ 170 billion for electricity transmission, distribution, and energy storage.

India added a record 10 GW of solar capacity in Q1 2024, a nearly 400% year-over-year increase, driven by the commissioning of delayed projects as module prices fell and the ALMM order was suspended, as well as improved grid connectivity to projects previously stalled.

India was ranked fourth in wind power capacity and solar power capacity, and fourth in renewable energy installed capacity, as of 2021.

Around US$ 2.8 trillion was invested in energy in 2023 globally. More than US$ 1.7 trillion is going to clean energy, including renewable power, nuclear, grids, storage, low-emission fuels, efficiency improvements and end-use renewables and electrification.

As of January 2, 2024, the Government of India is implementing the Production Linked Incentive (PLI) Scheme for the National Programme on High Efficiency Solar PV Modules, aimed at achieving gigawatt-scale manufacturing capacity. Under Tranche-II, with a budget allocation of Rs 19,500 crore (US$ 2.35 billion), Letters of Award were issued in April 2023 for the establishment of 39,600 MW of fully or partially integrated solar PV module manufacturing units.

In the Interim Budget for 2024-2025, The Government of India doubled funding for the National Green Hydrogen Mission, allocating Rs. 600 crores (US$ 72 million). Additionally, Rs. 17,490 crores (US$ 2.10 billion) were allocated for the Green Hydrogen Mission and the Strategic Interventions for Green Hydrogen Transition (SIGHT) Programme, highlighting a commitment to sustainable energy transition.

In the Interim Budget for 2024-2025, The fiscal allocation for solar power grid infrastructure development surged to Rs. 8,500 Crore (US$ 1.02 billion), a significant rise from the previous year's Rs. 4,970 Crore (US$ 0.60 billion).

With regards to government initiatives, in the Union Budget 2022-23, the allocation for the Solar Energy Corporation of India (SECI), which is currently responsible for the development of the entire renewable energy sector, stood at Rs. 1,000 crore (US$ 132 million). The government also allocated Rs. 19,500 crore (US$ 2.57 billion) for a PLI scheme to boost the manufacturing of high-efficiency solar modules.

On 23rd February 2024, the Government of India approved amendments to the Electricity (Rights of Consumers) Rules, 2020, aimed at empowering consumers and streamlining processes. Notable changes include faster installation of rooftop solar systems, separate connections for electric vehicle charging, etc. On February 13, 2024, Prime Minister Mr. Narendra Modi launched PM Surya Ghar Muft Bijli Yojana, offering free rooftop solar electricity to 1 crore households, backed by subsidies and concessional loans.

On December 12, 2023, the Union Minister for New & Renewable Energy and Power reported the installation of 140 MW solar power plants and 2.73 lakh standalone solar pumps under PM-KUSUM, aimed at farmer welfare and environmental sustainability.

The Ministry of New and Renewable Energy (MNRE) has proposed the establishment of a 13,000 MW renewable energy (RE) capacity along with a 12,000 MWh Battery Energy Storage System (BESS) in Ladakh. On October 18, 2023, the Cabinet Committee on Economic Affairs approved the construction of an Inter-State Transmission System (ISTS) to facilitate the power evacuation and grid integration of these RE projects in Ladakh.

India has launched the Mission Innovation CleanTech Exchange, a global initiative that will create a whole network of incubators across member countries to accelerate clean energy innovation. Prime Minister Mr. Narendra Modi pledged to boost India's renewable energy generation capacity to 500 GW and satisfy half of India's energy needs through renewable sources by the year 2030 at the Cop-26 Summit in Glasgow.

The Government of India wants to develop a ‘green city’ in every state of the country, powered by renewable energy. The ‘green city’ will mainstream environment-friendly power through solar rooftop systems on all its houses, solar parks on the city’s outskirts, waste-to-energy plants, and electric mobility-enabled public transport systems.

It is expected that by 2040, around 49% of the total electricity will be generated by renewable energy as more efficient batteries will be used to store electricity, which will further cut the solar energy cost by 66% as compared to the current cost. The use of renewables in place of coal will save India Rs. 54,000 crore (US$ 8.43 billion) annually.

BUSINESS STRENGTHS

1. Promoters’ Background: Solar91 Cleantech is led by IIT alumni, including Chairman Saurabh Vyas (IIT Bombay), Managing Director Prateek Agrawal (IIT Roorkee), CEO Sandeep Gurnani (IIT Delhi), and CFO Dhawal Vasavada (IIT Roorkee). Their credentials have significantly enhanced the company’s credibility among clients, suppliers, and government organizations, driving growth and stakeholder confidence.

2. Geographical Presence: While registered in Rajasthan with headquarters in Jaipur, the company benefits from the strategic presence of its Chairman in Gurgaon and CFO in Mumbai, enabling operations across states like Karnataka, Maharashtra, Gujarat, and Delhi. This distributed presence strengthens customer relationships and operational efficiency.

3. Cluster-Based Distributed Solar Model: Solar91’s unique model addresses challenges in distributed solar projects, such as sales costs, plant establishment timelines, and long-term operations. The company mitigates these issues with strategic team placement and efficient management, ensuring smooth project execution and client satisfaction.

4. Strong Order Book Under Favorable Policies: Solar91 has secured a 157 MW order under PM Kusum C2 in Rajasthan and an additional 24+ MW in Karnataka. These government-backed projects with capital subsidies provide a stable growth trajectory, supported by positive national solar policies incentivizing industries to adopt renewable energy.

5. Rapid Turnaround Time: Solar91 is recognized for its swift project installation and commissioning, minimizing lead times and maximizing client savings. This efficiency stems from its in-house execution teams.

6. In-House Design and Approval Teams: The company maintains a dedicated in-house plant design team to meet client needs and handles all government approvals across project stages, ensuring a seamless experience for customers.

7. Digitally Enabled Processes: Solar91 leverages advanced software for operational efficiency, including Tally Prime 3.0 for accounting, Zoho Inventory for sales and purchase, Salary Box and Keka for payroll management, and Microsoft Office 365 for data sharing and collaboration.

BUSINESS STRATEGIES

1. Expansion of IPP Portfolio: Solar91 is actively expanding its Independent Power Producer (IPP) portfolio under the PM KUSUM scheme, initially in Rajasthan and now in other states. This government initiative promotes solar energy adoption among farmers and rural communities. By broadening its geographic footprint, the company aims to strengthen its market presence and contribute to India's renewable energy goals.

2. Development of Solar Parks: Solar91 is focused on creating large-scale solar parks tailored to the energy needs of commercial and industrial clients. These projects aim to enhance sustainability, reduce operational costs, and position clients as leaders in environmental responsibility.

BUSINESS RISK FACTORS

1. High Upfront Investment and Financing Challenges: Solar projects are capital-intensive, requiring significant upfront investment in equipment, installation, and site preparation. This often results in long payback periods, posing challenges in attracting investors and homeowners, particularly in volatile markets.

2. Dependence on Favorable Weather: Solar91's operations heavily rely on stable solar weather conditions. Unfavorable weather can reduce efficiency, delay project timelines, increase costs, and directly impact revenue and profitability. Persistent adverse conditions may further challenge asset management and operational stability.

3. Risks in Fixed-Price EPC Contracts: The company operates under fixed-price EPC contracts, where cost estimation errors or unforeseen changes in scope can increase construction costs and working capital needs. Dependence on imports, especially from China, adds volatility to the supply chain, impacting project timelines and profitability, as seen during the COVID-19 pandemic.

4. Debt-Driven Operations: As of September 30, 2024, Solar91 had short-term borrowings of ₹586.63 lakhs and a debt-equity ratio ranging from 1.73 to 3.29 in recent years. Future reliance on debt or rising interest rates may increase financial obligations. A failure to generate sufficient cash flow or secure additional financing on favorable terms could adversely impact operations and growth plans.

5. Disruptions in Solar Infrastructure: The company’s dependence on solar infrastructure in India makes it vulnerable to disruptions from political unrest, natural calamities, labor issues, accidents, or negligence. Such events can increase costs, delay projects, damage reputation, and result in penalties, ultimately affecting profitability and long-term business prospects.

NOTE : Solar91 Cleantech faces several critical risks, including high upfront investments, dependency on stable weather for solar power generation, challenges in executing fixed-price EPC contracts, reliance on debt financing, and potential disruptions in solar infrastructure. These factors collectively highlight the importance of effective risk management and strategic planning to ensure sustainable growth and profitability.