Emerging Business Models in Cleantech

There has been a rise in innovative business models that promote sustainability across sectors

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India's cleantech startups have been developing products and services that offer efficient solutions at low-cost. This has been made possible by the use of advanced technologies. The sectors that have particularly been promoting sustainable living and practices include electric vehicles and agriculture. However, there has been a rise in innovative business models that promote sustainability across sectors.

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New and upcoming business models

Innovative, flexible products and gadgets that seamlessly use renewable energy sources along with traditional sources are one of the emerging business models. Such products are increasingly becoming available in sectors like livelihood devices, agriculture tech, and other areas.

"Circular economy-oriented products that upcycle waste such as Products and processes that convert pollutants to usable products and Bio-fuels from farm waste and agri-waste are also some of the emerging models," said Swapna Gupta, partner, Avaana Capital.

The most popular trend in the sector is renewable energy integration. "The objective here is to achieve mass production of energy while minimizing expenditure and waste. Alternative mobility solutions are also picking up pace. The use of EVs and hydrogen-based fuel is on the rise. The other trends include carbon capture, energy consumption management, use of green material, and utilization and storage (CCUS)," said Gaurav Singh, founder, JPIN.

Further, we are seeing innovative business models emerge across the spectrum of mitigation, adaptation and resilience. "Companies are solving for the green energy transition, building technologies for more efficient energy storage and distribution and decentralization. Technology-led solutions for more efficient management of key resources like land, air and water will be essential in ensuring that we minimize further resource burden. In agriculture, food security takes prominence, with technology like precision agriculture, and climate-resilient processes. Sustainable consumer brands are also emerging, building upon the tenets of circularity. Supply chains are also transitioning towards sustainability, through digitization and process efficiencies," added Gupta.

Capital-intensive cleantech solutions have often hindered adoption due to their high CapEx. But by being able to provide operational savings, willingness to adopt is massive. "OpEx models thus help in early adoption of new-age cleantech solutions. With more and more hybrid solutions being developed, a function-oriented model is also prevalent, i.e. paying for the functionality of the product or service. For eg, pay per-use models as prevalent in the power industry or pay per km in the mobility industry," said Akshay Singhal, co-founder and CEO, Log9 Materials.

On-ground and other challenges

While many innovations have been happening at the product and service level, the challenges in terms of increasing adoption, thereby ensuring a successful business model, are many.

A major challenge agri-cleantech startups usually face is farmer adoption and financing which is critical for proof of concept which in turn is key for raising further funds, said Subhadeep Sanyal, partner, Omnivore.

Some of the key on-ground challenges faced by cleantech startups across the sectors include creating awareness and adoption for the first-time users, a high gestation period of technologies, not only from the product development side but also from the users' end to finalize a contract with new-age cleantech solutions and high upfront costs of sustainable technologies

"Bridging the gap in the availability of initial capital for the end-users, ensuring availability of services in remote locations, the threat from lower quality or cheaper alternatives from China are some of the hurdles that industry is looking to solve," said Avaana Capital's Gupta.

"In an upcoming sector such as climate, startups require more than only capital: they need full-stack ecosystem support to scale. This includes digital and innovation access, industry linkages for GTM acceleration, policy and academia support for key insights, as well as catalytic capital for capacity building" she added.

Moreover, investors are deterred by the unpredictable nature of renewable energy generation due to the reliance on sources like wind and sun. Furthermore, the resources needed to set up plants to harness energy from these sources are immense. It involves planning, research, technological development and integration.

"These startups need resources and backing to contribute meaningfully to India's goal of achieving zero net emissions. Although schemes like Aatmanirbhar Bharat and Startup India Scheme have helped, these developments have made cities like Delhi and Bangalore their focus. Support is still needed to help these startups expand into other cities," said JPIN's Singh

Experts feel that startups should take continuous efforts to create the need of the hour, which is consumer awareness, and also adopt incentive-based commercialization of the product or services.