Mahindra War Room 2014

Energy Business Caselet

MAHINDRA PARTNERS SECTOR

ENERGY BUSINESS CASELET
Mahindra Partners is the internal incubator of new businesses for the Mahindra Group,
supporting a portfolio of existing ventures across Retail, Logistics, Boats, Energy and
Media, while constantly exploring new ventures. This caselet pertains to Mahindra EPC
(Engineering, Procurement & Construction), which is one of the companies operating in
the Energy business.

BUSINESS BACKGROUND
Mahindra EPC was started with the vision to be Indias leading Green Engineering,
Procurement & Construction firm. It had a promising start in 2011 when it made its foray
in the Solar industry and broke even within the first year of operation. The success story
continued as it emerged as Indias largest Solar EPC player in the very second year of
operation. Mahindra EPCs quality execution and timely delivery of projects have been
well-acknowledged by its customers as well as the Ministry of New & Renewable
Energy (MNRE). The business was riding high on the boom in the Indian solar industry
due to favorable policies, technology advancements and price reductions. However,
Mahindra EPC realizes the risks of being in a a policy-driven business and hence has a
clear focus on differentiation through innovation.
Mahindra EPC ventured into Distributed Solar in its third year of operation and
successfully launched a range of productized solutions like Telecom Tower Solarization,
Diesel Generator - PhotoVoltaic (DG-PV) Hybrids, Solar Generator and Solar Water
Pumps, apart from the existing Rooftop Solar PhotoVoltaic solutions. These products
are powered by Mahindra EPCs indigenously developed controller units, for which
patents are pending. Till date, Mahindra EPC has a portfolio of 90 MW of projects,
including 3MW of roof-top solar, 1000 telecom towers and pilot installations for DG-PV
Hybrid, Solar Generator & Solar water pumps.

LIVE CHALLENGE: MAHINDRA EPC BUSINESS STRATEGY

Solar Energy has several advantages, particularly for India:
1. Solar Energy causes least of the environmental challenges compared to other
renewable energy sources, such as Hydel or Wind Power
2. Solar Panels can also be installed across country owing to India having more
than 330 sunny days across major part of the country.
3. Solar provides a solution for the energy requirements of rural areas, households
and agricultural needs, and is therefore highly relevant to India. Solar water

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Mahindra War Room 2014

Energy Business Caselet

pumps allow farmers to avoid loss of crop due lack of stable grid power or costly
diesel power for irrigation.
4. Grid Parity in terms of cost for Solar and conventional sources of energy is
reducing
Awareness programs and subsidy schemes launched by the Ministry of Non-Renewable
Energy and State Governments have resulted in the installation of over 20,000 solar
water pumps across the country, with the overall potential as high as 1,80,00,000
pumps. Decentralized power production will not just address the energy requirements
but also help create an environment conducive for micro-enterprises such as agri
processing, repair shops and battery charging. Pilot Projects under the aegis of CII and
with support from Rockefeller Foundation have been initiated for fostering this
sustainable economic development model.
Power shortages are estimated to entail a GDP loss of US$68 billion (0.4% of the GDP),
according to a report released by FICCI, in association with Booz & Company.
Distributed Solar is a boon for the Indian Power Industry, currently plagued with high
Transmission & Distribution losses, power generation deficits, poor grid connectivity and
stability. It also reduces dependence on Diesel Generating units as an alternate source
of power, thereby reducing operational costs as well as CO2 emissions.
But, Distributed Solar has its own set of challenges - High Initial Investment
Requirements, Constraints on space availability on rooftops (most commercial entities
do not own their rooftop space) and Constraints of distribution, execution & service in
remote locations. Parts of India (such as remote telecom towers, SMEs with unreliable
grid etc.) are 100% reliant on Diesel Generator based power, leading to not only high
cost of operation but also recurring subsidy burden on exchequer.
With this background and based on evolving needs of Indias current
demographic profile, evolve a detailed strategy for Mahindra EPC encompassing
the following:
1. What kind of products and solutions Mahindra EPC should focus on as a part of
its Distributed Solar strategy?
2. What should be the approach for distribution of these products and services?
Should it be through Setting up own distribution channels, Tie ups with other
players in industry, Collaborations with Local/ Village level entrepreneurs or any
alternative approach to distribution?
3. What policy interventions will help drive the Distributed Solar market? How can
Mahindra EPC as a responsible business help shape such an environment?
4. What business, financial & technological innovations can help Mahindra EPC
create differentiation and stay of the competition?

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