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 Climate Change

Finance
Published on: June 12, 2020, 11:28 p.m.
Sunvest Capital sees an opportunity in solar energy adoption
  • Receiving the InnovatetoInspire award at an EESL summit

By Business India Editorial
A

s any banker knows, the core to a robust credit process is understanding the risks associated with a business. This is especially the case for emerging and less understood businesses like rooftop solar installation. Founded in 2019, Sunvest Capital is India’s first dedicated Non-Banking Financial Company (NBFC) focussed on the market gap of rooftop solar financing.

Sunvest combines solar intelligence with fintech-enabled lending, to provide affordable and accessible financing solutions to end consumers in the small and medium business and residential rooftop segments.

Before starting Sunvest Capital, Sishir Garemella ran Sunvest Energy for four years. Sunvest Energy pioneered residential and small commercial solar installation across multiple states in India. Prior to that, Garemella was with L&T Infrastructure Finance, working on renewable energy financing. This combined experience gave him a sense of the risks associated with solar installation, and helped him identify an opportunity in solar financing.

India has 15 of the 20 most air polluted cities in the world. Clean technology adoption is a direct intervention to reduce greenhouse gas emissions, but so far India has only reached approximately 10 per cent of the 2022 rooftop solar targets set by the government.

Particularly in the current economic environment, Garemella sees a large opportunity for clean technology and solar energy adoption. SMEs are India’s growth engine, and electricity costs are one of their top three expense items. Traditionally, SMEs and MSMEs have struggled to adopt solar energy solutions due to high upfront costs and, equally critically, the lack of access to finance.

While there is significant capital within the existing lending ecosystem, there is a market gap of last-mile financing. Rooftop solar as a bankable business model and as a loan asset class are not clearly understood by traditional financers.

Garemella, however, makes the business case for solar loans as the next safe asset class, with strong qualification criteria for equipment and installers, and a robust underwriting framework. The Indian lending system has seen securitisation of solar loans; the technology has proven itself over the past 10 years and monitoring performance remotely has never been easier than it is today, with big data and other analytics. Sunvest Capital believes that “rooftop solar loans are a safer asset class than consumer durables or personal loans.”

Garemella’s background in the solar installation business has enabled him to create a loan product that speaks directly to the needs of the SME. Structured as a collateral-free loan, SMEs can pay out of their electricity savings and enjoy the long-term benefits of solar. The ownership of equipment also allows the SME to keep tax benefits associated with the solar equipment. Specialised NBFCs like Sunvest Capital help in aggregating loans for larger financial institutions.

Sunvest has been recognised multiple times for its innovative financial offerings. It won the US India Clean Energy Finance (USICEF) Grant in late 2018 – the first Indian financial services firm to be awarded this grant for preparatory activities for their lending business. In November 2019, Sunvest Capital and UGRO Capital put together a corpus of Rs20 crore towards solar financing for MSMEs – a first of its kind financing model in India. Sunvest also won the InnovatetoInspire award of EESL – A Government of India Enterprise - in the innovation in financial instrument category.

Currently providing MSME loans from Rs10-50 lakh through an installer network, Sunvest works across Mumbai, Pune, Ahmedabad, Bangalore, Chennai and Hyderabad. Garemella continues to see opportunities in a post-Covid environment, with a focus on essential services in the MSME segment.

Sunvest also plans to bring forward their launch of residential solar loans to create a stronger impetus towards solar adoption.


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