The definition of cleantech varies considerably. I tend to use a fairly broad definition encompassing the entire value chain—clean generation, transmission and distribution, storage, analytics and services, energy efficiency, clean water, and applications based on renewable energy sources such as solar lanterns and biocoal. In short, cleantech is massive. And there isn’t a country that needs to harness the power of cleantech as much as India.

The energy supply demand gap will continue and likely increase over the decade. As India continues to grow at 7-10% annually, industrial growth, as well as the growing middle class and its insatiable appetite for everything electronic, will continue to drive energy demand, and therefore, the energy deficit. One cannot also forget that a majority of India’s population lives either completely off-grid or on highly unreliable grid. That challenge represents massive opportunity.

From a policy standpoint, there is a genuine push towards clean energy, across wind, solar, hydro and bio. Grid-connected renewables capacity in India stood at 22 gigawatts (GW), comprising 11% of total power generation in the country, with 2.8 GW of wind capacity added in 2011 alone. Solar capacity is on the rise due to both the Nehru Solar Mission as well as several state-level initiatives. The 12th Five-Year Plan aims to install 18.5GW of renewable energy.

The cleantech opportunity is being addressed by entrepreneurs and intellectual capital that is both home-grown and transplanted. On the home-grown front, Breson, a developer of micro-wind turbines and irrigation pumps, is addressing the issue of off-grid, distributed power generation as well as energy efficiency in the agriculture sector. Distributed power generation, at the end-customer level, will garner increasing attention for two key reasons: They are the ones suffering the blackouts, brownouts or no access to electricity at all in the case of complete off-grid villages; and second, generation at or near the point of consumption overcomes the transmission and distribution losses.

Evaluation of a potential investee company involves looking at the three Ts and the M—Team (that can execute), Technology (that is differentiated), Traction (validation from customers), and the Market (large enough to provide meaningful returns to venture capital investors). In Breson’s case, the potential market is large. The team, although small, is capable as long as they continue to add world-class horsepower to the team. Micro-wind is an area that has been studied at length over the past year, and my guess is that technology will have less to do with the eventual success. It will all be about execution. The major execution hurdle to overcome in this case is distribution. The business model has to be economically viable, with a technology that is reliable, durable and an excellent RoI (return on investment) for the customer. Distribution leads to scale, which will be key to achieve unit economics that make the business viable.

The real catalyst for adoption of renewables at the consumer level, in my opinion, will be financial incentive. Take a US company like Solar City, for example. It’s a leader in rooftop solar installations for residential and commercial customers. The company’s growth skyrocketed when the US government offered tax incentives to banks for providing low-interest loans toward the purchase of rooftop systems. Essentially, the sell was a no-brainer to the end-customer. Without any up-front capital expenditure, the customer could save 10-15% on their electricity bills. In India, if the ministry of new and renewable energy, the ministry of power and the finance ministry were to collaborate and proliferate a similar set up, it would be game changing for India’s energy-starved consumers, entrepreneurial ventures like Breson and the entire cleantech ecosystem.

Mohanjit Jolly is managing director at Draper Fisher Jurvetson India, a venture capital firm.

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