Over the last few years, large oil companies have vacated the solar business. In the place of Big Oil, companies such as First Solar and SunPower have become the major players in a market that varies regionally across the globe. To explore the new markets for solar, VerdeXchange News spoke with Damian Miller, founder and CEO of Orb Energy. By leveraging a customer-service-oriented business model and an entrepreneurial spirit, Orb Energy, headquartered in Bangledor, India, is hoping to become a major player in India’s efforts to build its solar capacity.
VerdeX: According to your marketing materials, “Orb Energy is a one-stop shop for solar solutions.” What’s your market niche and Orb Energy’s business plan?
Miller: The market niche in India is the customers who don’t get the kind of service they want from the electric utilities or customers who feel like they’re paying too much and could do better with a solar energy alternative. We don’t just make one product or one component of a product. We try to give the customer a total solution, which means that we work with technology partners for the solar modules and the solar thermal collectors, and then we design, install, and service the system. Our customer really gets the end use, which is the energy.
On the technology side, we do both solar photovoltaic systems and solar thermal systems. The solar photovoltaic is for electric power. There we work with both thin film and with polycrystalline providers. We work with a distributor for Uni-Solar, a U.S. company based in Michigan. They produce a flexible laminate, which we use in module form. On the polycrystalline side, we work with SunPower from the U.S. We also buy cells and have modules made for us here in India—whatever works best in terms of cost and quality.
On the solar thermal side, China is basically 60 percent of the world’s market. We buy solar evacuated glass tubes from China and integrate them into a system here in India. That’s a low-cost, high efficiency way of delivering hot water on a regular basis. India basically has 365 sunny days a year, and people will be able to get hot water from solar. It’s a cost-effective option that takes two or three years to pay back.
We also do some energy-efficient solutions that complement our systems. We do a range of solar lighting—solar outdoor lighting for streetlights and so on. We will also even do a series of energy-efficient fans.
VerdeX: Describe the solar marketplace in India. What Indian government incentives encourage solar and drive the marketplace for renewables?
Miller: This market is quite unique in the world, in terms of solar. Obviously, solar thermal is universal. There are very few countries in the world where solar thermal doesn’t make sense for hot water.
Solar photovoltaics in the U.S. are driven by tax incentives; in Japan, they are driven by capital subsidies; in Europe, by feed-in tariffs. But in India, they are driven purely by customer demand for reliable power. We don’t work with any subsidy for solar photovoltaics, which is quite unique. Customers buy it simply because they’re pretty frustrated with the service they get from the existing grid. There are a lot of brownouts in India, especially as you move into rural areas. Because we have a deep reach in those rural areas, we are well placed to serve this market. Today we have 30 branches. Our target is to have 60 or 70 by the end of the year. If we have that reach, we can reach customers both in the cities and in rural areas. There’s really a climate for reliable power.
The opportunity is obviously gigantic. Seventy percent of India’s population—700 million people—lives in rural areas, and most have an issue with power. Our aim is to be very relevant to that customer base for solar photovoltaic, as well as having a solution for the cities, which tend to be more solar thermal.
VerdeX: What percentage of the energy market in India is supplied by solar—either thermal or photovoltaic—and what’s the potential of the solar market to grow?
Miller: It’s actually very small. There are no more than two to three cumulative megawatts of grid-connected solar power. If you talk about the off-grid solar, the government says that it’s done probably a maximum of 300,000 solar home systems. Add the number of solar lanterns and streetlights, and the max is about 1 million off-grid solar systems that have been done by the government. Today, we estimate that the annual market in India—not the export market—is in the region of two to three megawatts on an annual basis for PV. But, the solar thermal market is growing by leaps and bounds, and that’s really driven by the fact that it’s already reached economic payback in two or three years.
About 6 percent of all of India’s power supply today is renewable. The rest is either fossil fuels or nuclear. Six percent is substantial, but it’s far off of the 25 percent renewables by 2030 that former President Kalam said he wanted the country to achieve. If you take that number today, renewables are only about 8 gigawatts in terms of total installed, which still includes hydro.
India wants to increase its total electric power capacity from about 140 gigawatts to 800 gigawatts by 2030. Twenty five percent of that would be 200 gigawatts. India is trying to go, in 20 years, from having 8 gigawatts of renewables to 200 gigawatts. It’s a huge, monumental challenge.
VerdeX: What are some of the ways that the government is encouraging the development of grid-connected solar in order to meet these targets?
Miller: In January, the government in India introduced a new grid-connected solar policy for solar photovoltaics. It’s basically targeted at the large-scale grid-connected segment. It’s not for the household grid connection. It’s a minimum of one megawatt, so they’re targeting solar power plants. What they’re doing is offering a tariff of roughly 37–38 U.S. cents per kilowatt-hour produced over a ten-year period. It’s only ten years. It’s not a 20-year benchmark that you might get in Germany or Spain, and it less than the amount you get in Germany or Spain. But the solar installation levels in India are very high, so there’s a scope for producing more solar power, and getting that level of tariff should make it viable.
The government wants to do 50 megawatts in this year alone. It’s a tall order, given how far everyone has to come in figuring out all the regulatory intricacies and actually making it happen. So, we expect it to be a year or so before we see the first solar power plants, but we’d like to be a part of those initial plans to go in.
VerdeX: A number of the major petroleum companies—Shell Solar, Arco Solar—over the last twenty years have invested capital in solar. Over the years they have also exited, passing that torch to companies like Orb energy. How has the solar marketplace changed in the last decade?
Miller: They haven’t necessarily passed the torch onto us, but there were players who came into the market as entrepreneurial start-ups five or six years ago, companies like Q Cells, from Germany, or SunTech, from China, REC, a silicon producer from Norway, and First Solar and SunPower, from the U.S. All of these companies were just business plans five or six years ago, or on very small scales of production.
That was when Shell bought Siemens Solar as it moved into the number four position in the world. BP Solar was somewhere around number three. The top players were in Japan. Now Shell has largely exited solar and BP is barely in the top ten.
The culture among the oil companies is totally unsuited for solar. They’re used to making big bets on natural resource extraction. Those big bets tend to mean that they move very slowly in making their analysis. They are slow and they’re risk-averse. What you see is that the entrepreneurial start-ups in the solar industry basically ate them up. It’s not the first time in history that the industry outsiders have come and taken the market from the players that should have had an interest. The focus of entrepreneurial start-ups is a much more effective home for solar.
VerdeX: The March issue of VerdeXchange News featured an examination of Wales-based G24i and thin film solar. What are the prospects for commercializing thin film?
Miller: On the production side, in theory, it should become much more cost-effective to spray thin film onto material, or put it onto a substrate, than it would be to make silicon cells and laminate them into modules. In that sense, from a cost production point of view, thin film is hugely attractive. I think the latest from First Solar is that they have production costs of only $1.30 a watt. They may be selling at $3.00–$4.00 a watt; so they’re obviously making good money. Their production costs are the lowest in the market by far.
Then you can look at the customer side. The solar products offered by Uni-Solar, because they use something called triple-junction amorphous thin film, generate 20 percent more usable watt-hours every day. That means that the module works better in cloudier conditions, in the morning when there’s diffuse light, and in the evenings when there’s diffuse light. It picks up on more of the available spectrum of light. For companies like G24i, they’re in a fascinating new realm where solar is potentially applied on everything inside or outside. It can be applied on curtains, on blinds, on clothing. You enter a realm of new applications.
The question with thin film is really with execution on large-scale production and getting it to market in a way that it’s a stable product, that people feel comfortable buying, and that has the same warranties that people expect. We’re going to see that happen now, as you see other players like NanoSolar coming into the market, Uni-Solar, with new management, ramping up their production, and companies like G24i raising more capital.
VerdeX: Orb recently received an award of $1 million from the U.S. State Department in support of the goals of the Asian-Pacific partnership on clean development and climate. Talk about that award and its significance for the company.
Miller: We were very honored to receive the award from the APP. The APP is a seven-country initiative that was set up mainly between the U.S., Canada, Australia, China, India, South Korea, and Japan. It is an initiative to try to accelerate the deployment of clean energy technologies into the marketplace. It was designed to encourage innovative businesses to come up with innovative new ways of getting clean energy technology into the market. Of 180 applicants, ten received the prize.
In terms of money, today it’s a reasonable amount of money relative to our capital base. In the future, it will hopefully be just a drop in the bucket for us. But it enables us to do a few innovative things that we might not otherwise have been able to do and to test them in the marketplace. If they work, we think that it will set an example to others to follow, with benefits that spin-off way beyond us in terms of overall diffusion of renewables in India.
VerdeX: On your website, it says, “Orb doesn’t just sell a system; we maintain it.” You’re opening up branches throughout India. Talk about the strategy for delivering your product throughout your marketplace.
Miller: When I was at Shell, I had experience with setting up what was called at the time “Shell Solar Centers.” We set up 16 of these throughout Sri Lanka, 27 in India, 15 in the Philippines, and it went on from there. These were branches that sold solar photovoltaic systems, mainly to homes and small shops in unelectrified areas. I had a chance in doing that job to figure out what worked and what didn’t.
One of the things that we wanted to try in Orb when we started was a new approach, more of a franchise approach, just to see if we could get a little more entrepreneurship at the local branch level, rather than just having a guy on your books who’s earning salary. We did a franchise approach as opposed to just a dealer approach because, with the franchise, you have a little more control over issues like quality. The quality of the installation is very important to us, and so is the quality of the service. It’s also key for us to create the brand throughout India. We wanted uniformity in the look and feel of the branches, and you’ll be able to see that on the website. We also wanted to ensure that was a uniform sales methodology. All of that led up to using a franchised approach.
We emphasize service so much because, if you sell a system that doesn’t work, nobody is going to refer your company. Worse than that, they’re going to say that solar doesn’t work in terms of technology. This technology is still in its infancy in terms of customer awareness and appreciation, so it’s very important that customers get a good feel of it from day one. We make sure that service is built into the price; customers get it free for the first year—three free visits by trained technicians. After that, they can purchase our annual maintenance contract, and we’ll ensure that we go out and do service maintenance on a regular basis.
VerdeX: You’re cognizant of the Kyoto agreement, the Bali conference, and the international effort to reduce greenhouse gas emissions. How does that activity affect Orb Energy’s business plan and marketing going forward? How is it a driver of change?
Miller: It’s affecting our world in a very amorphous way right now. At the level of the international climate change negotiations, India (as well as China) is still taking a tough stand that says that they didn’t create the climate change problem, so it’s not up to them to solve it.
The problem with that approach is severalfold. Not only is India now choking on growth in terms of local environmental pollution, but also in terms of climate change and the impact in terms of the loss of glaciers in the Himalayas that provide water to virtually 1 billion people across the northern part of South Asia. That is a huge security issue. I think those kinds of things are starting to dawn, but at this stage, there is still a certain amount of deadlock and intransigence.
Unfortunately, in the planning committee in India, there is still the certain sense that economic growth cannot be compromised at any cost. There’s still a view that supporting renewables will mean compromising economic growth. They simply do not understand the huge wealth potential in renewables. The fact that entire economies have to transition to renewable energy technology is obviously a huge opportunity. There will be some losers, but the winners will be immense. The number of new jobs created will be staggering.
It’s now a question of that message getting to the top planners in India. To a certain extent, in seeing the grid-connected solar market come on board to India, the message is starting to get through. I think the planners know that India has a big problem in getting from something like 140 gigawatts today to 800 gigawatts, a five- or sixfold expansion by 2030. It’s already a net-importer of coal, so where’s that energy going to come from? That’s where this nascent turn for solar is coming from. It’s probably not coming as much from the climate change negotiations as we would like.
The proviso I’ll add to this is that India was one of the early signers of the UNFCC. It has been one of the early contributors to GF. It has been one of the early participants in carbon trading. One of the areas we’re going to get into is aggregating the carbon emissions that we save through the sales to our customers and making that available on the marketplace for people to buy. The more that the climate change convention comes into a force that puts together a clear regime for carbon trading, the more that will benefit our business.