Consulting firms eyeing Indian renewable energy sector
The Indian government’s commitment to implementing large scale renewable energy infrastructure by the early 2020s is boosting business investment in the sector, luring the attention of dozens of foreign investors including large international consulting firms.
The recent wave of government reform in India has gotten international consulting firms reinvigorated about India’s future. In-depth research from McKinsey & Company shows that, on the back of a recovering economy and effective reform, India’s economy is set to grow at 6.1% or more through 2025. This optimism was reconfirmed earlier this month by Rich Lesser, the global head of The Boston Consulting Group.
One of the industries over which the sun is rising at the moment is the renewable energy sector. The Indian government has announced bold plans in the field, looking to add 10,000 Megawatts of wind power per year till 2018-19 and to increase its solar capacity target from 20 GW installed by 2022 to 100 GW. To realise these targets, massive investments are being planned for and unveiled and, as a result, large corporates and start-ups alike are looking to enter the sector, which is further stoking the interest of large consulting firms. As it stands advisory firms do not yet have a strong presence in India’s solar energy markets. However, after seeing the revenue growth potential, firms such as Accenture, Deloitte and The Boston Consulting Group are looking to change this.
Manu Rishi Puri, Principle of Accenture’s Resources Practice, comments on their recent entry to the market: "Renewable energy needs a lot of work on consulting. We are seeing a lot of companies both start-ups and large companies who require consulting services. We offer services like portfolio optimisation where we tell companies how much of wind or solar they should have in their kitty, and also help in things like wind flow studies," As it stands the company has about 300 people in the 'Resources Practice', who work for the chemicals, energy, forest products, metals and mining, utilities and related sectors, a number that it plans to double in a year.
Deloitte too sees large potential in India’s energy market, admits Debasish Mishra, Senior Director of Deloitte in India. "We have been doing significant work in the wind and solar space assisting both private sector and the government. There is a lot of activity in solar and the wind sector too is seeing a lot of activity with consolidation happening and a lot of independent power producers entering the sector. At times, we do a lot more work in the renewable energy space than conventional power. There is about a 30 to 40% growth in revenues."
A conclusion echoed by Kaustav Mukherjee, Partner and Director of the The Boston Consulting Group, saying: "We work with companies of different sizes helping them in areas like strategy, funding, diversification, forward or backward integration. Over the last year, renewable energy has contributed to a larger share of the energy sector business. This is becoming one of the focus areas as renewable energy is emerging as a credible option of power supply in India."
It’s not just large established businesses taking advantage of the governments drive toward renewable energy. "Of late we are seeing an increase in start-ups coming to us for help with expanding the scale of their business," says Amol Kotwal, head of the Energy and Power Systems Practice at Frost & Sullivan. One possible driver of the renewable energy market is the Government’s changes in tax policy, which include a reinstatement of favourable tax breaks like accelerated depreciation (AD) and generation based incentives (GBI) this year, which were suspended in 2012. The changes will enable manufacturers of wind mill equipment as well as power generation companies to expand and add capacity aggressively.
