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ACCESS TO ENERGY AND SUSTAINABLE MOBILITY: LANDSCAPING FUNDING AND INVESTMENTS IN INDIA Despite 100 per cent electrication , in 12 out of the 29 states, fewer than 80 per cent of the households have been electried.” “Authors Design and Typesetting Copy-editing ABOUT THE REPORT Asian Venture Philanthropy Network India (AVPN) has prepared this report for creating and disseminating knowledge about two critical sectors Access to Energy (A2E) and Sustainable Mobility (SM). CIIE has undertaken the conceptualization and development of this study and now presents it as a report titled “Access to Energy and Sustainable Mobility: Landscaping Funding and Investments in India.” This report is structured as a funnel, with each section being more focused and pointed than the immediately preceding one. It presents an overview, current investment and funding landscape, and a guide for investors and funders for A2E and SM separately. It also outlines the current funding and investment scenario in both the sectors and details the three key takeaways for investors and funders risks and challenges, opportunities and gaps, and an outlook for the future. We believe that readers will resonate with the insights presented. It is our hope that this report will spur positive nancial support towards the innovation and entrepreneurial activity in these two critical sectors of the Indian economy. Published by the Asian Venture Philanthropy Network and CIIE in June 2018 This work is licenced under the Attribution-NonCommercial-ShareAlike 4.0 Interna- tional License: Attribution You must give appropriate credit, provide a link to the license, and indicate if changes were made. You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use. NonCommercial- You may not use the material for commercial purposes. ShareAlike- If you remix, transform, or build upon the material, you must distribute your contributions under the same license as the original. Snehil Basoya & Supriya Sharma, CIIE Saman Arora Mekala, CIIE Nandakumar K. 03TABLE OF CONTENTS 1. FOREWORD 06 2. ACKNOWLEDGEMENTS 07 3. EXECUTIVE SUMMARY 08 4. METHODOLOGY 09 5. ACCESS TO ENERGY 10 5.1 Introduction 5.2 Status of Energy Access in India 5.3 Mechanisms for Energy Access in India 5.4 Current Funding and Investment Scenario in India 5.5 For Investors and Fundersa. Challenges and Risks for Investors and Fundersb. Opportunities and Way Ahead for Investors and Funders6. SUSTAINABLE MOBILITY 28 6.1 Introduction 6.2 Status of Sustainable Mobility in Indiaa. Government Policies and initiativesb. Thrust for Electricc. For Prot Enterprises (Other than Electric) 6.3 Current Funding and Investment Scenario in Indiaa. Electric Vehiclesb. Other For Prot Enterprises 6.4 For Investors and Fundersa. Challenges and Risks for Investors and Fundersb. Opportunities and Way Ahead for Investors and Funders 8. CONCLUSION 43 7. KNOWLEDGE PARTNERS 44India with a population growth rate of 17.7% between the census of 2001-11, now has 1.35 billion people residing on its land. With the increase in population there is an ever increasing demand for electricity and access to energy leading to huge pressure on limited resources. Despite 98% village electrication a million people still do not have access to energy. Though technology advances have made it possi- ble to meet a lot of the electricity demand, lack of knowledge about the unserved and the underserved markets hampers the implementation of innovative energy solutions for these segments of population. Consequently, for a large number of people, the clean energy solutions that are on oer are non-accessible as well as unaordable. There is a huge need to identify the opportunities where signicant energy invest- ments can be made to make clean energy equitable and accessible to all. Similarly, the exploding population growth calls for attention to the transportation and mo- bility sector especially in urban areas, where there is a need for innovative models that deliver eciency, mobility, speed, and overall sustainability. There is a need for funding of such models so that they are able to scale rapidly to make desirable impact. Recognising these several needs, this brief report Access to Energy and Sustain- able Mobility: Landscaping Funding and Investments in India aims to provide an overview of the two sectors Access to Energy and Sustainable Mobility in India, highlight the innovative mechanisms currently in existence that provide energy access and sustainable mobility and provide an overview of the investment and funding landscape across these sectors. AVPN strives to increase the ow of nancial, human, and intellectual capital into the social sector to help multiply social impact. We hope this brief report encourag- es like-minded peers to come together to make a collective eort in maximising impact in the sectors of access to energy and sustainable mobility. We are grateful to Shell Foundation for their generous funding and partnership for bringing out this report. We are also thankful to Centre for Innovation Incubation and Entrepreneurship (CIIE), our research partners and all the Knowledge Partners who have contributed in various ways to the report. Asian Venture Philanthropy Network (AVPN) FOREWORD 06We thank the following investors, enablers, stakeholders, and subject matter experts who have shared their insights and data for this study. Abhishek S Intellecap Amber Maheshwari INFUSE Ventures Ananth Aravamudan Villgro Bharath Jairaj World Resources Institute Chintan Antani CIIE Initiatives Deepak Gupta Shakti Sustainable Energy Foundation Emaa Caddy OPES Impact Fund Huda Jaar SELCO Foundation Jerey Prins IKEA Foundation Kanishka Dasgupta Intellecap Krishna Kumar OKAPI Research and Advisory Pamli Deka World Resources Institute Rajesh Rangarajan OKAPI Research and Advisory Ranjit Gadgil Parisar and SUM Net India Rohan Choukkar Bharat Innovations Fund Sandeep Roy Choudhury VNV Advisory Shishir Soti Shakti Sustainable Energy Foundation Shyam Menon Bharat Innovations Fund Srinivas S N Clean Energy Access Network (CLEAN) Vipul Patel CIIE Initiatives Vivek Chandran Shakti Sustainable Energy Foundation Vivek Shastry SELCO Foundation We thank the knowledge partners who have lent their support to this study and to AVPNs knowledge-building initiatives in this sector. Shakti Sustainable Energy Foundation The Ashden India Renewable Energy Collective IKEA Foundation VNV Advisory OKAPI Research and Advisory We are grateful to the AVPN team for their inputs and for enabling connections within their networks. We thank Binali Suhandani for her encouragement and vision that helped dene the direction for this study. We would also like to thank Martina Mettgenberg-Lemiere for her valuable comments and feedback on the report. We would like to thank Kavita Tatwadi in particular, for her enthusiasm and commitment. She was an equal partner in this study. 07 ACKNOWLEDGEMENTS Authors08 This report outlines the funding and investment landscape for two sectors of the Indian economy Access to Energy (A2E) and Sustainable Mobility (SM). It is organized in two main sections represent- ing the two sectors. Each section can be visualized as a funnel including three main subsections Sectoral Overview, Current Funding and Investment Landscape, and Takeaways for Investors and Funders. The Sectoral Overview outlines the history and the current scenario including, specically, identifying the sub-sectors or domains, key products, and services. A signicant government presence character- ises both A2E and SM sectors. The overview section details the various government policies and schemes, highlighting their impact and outcomes, where relevant. The government intervention in the A2E sector spans various forms of energy including electricity, renewable energy, particularly solar power, and clean cooking. While some schemes are a few decades old (e.g. National Biogas and Manure Management Programme was launched in 1981), many have been launched recently (e.g. the imminent Draft National Energy Policy). Amongst other forms of energy, a signicant government intervention in SM sector pertains to electricity. Among various state and national government policies, the National Electric Mobility Mission Plan (NEMMP) 2020 was instituted with a target of reducing CO2 emissions by 4 million tons. Interestingly, much private participation is also happening in the electric space (including private and public transport, charging infrastructure and freight). Many other aspects of sustainable mobility including last mile connectivity still need considerable support. Market failures in both the sectors can be seen as the reason for the conspicuous government pres- ence. Long gestation periods, undependable returns, and high enterprise failure rates continue to characterise the sectors. Even with growing private participation, the government continues to be an active and important player in both the segments. The sub-section Current Funding and Investment Landscape identies the types of funding and investment support available in the sectors and the sources, i.e. the kinds of organizations providing this nancial support. Government continues to have a noticeable presence in the funding space with a number of grants under various schemes at their disposal. Private sector participation, in the form of debt or equity support, continues to be low. The perceived riskiness of the A2E sector has led to only 40 per cent of the available capital being channeled into enterprises during 2013-2016. SM presents varied trends in dierent sub-sectors including investments in setting up manufacturing establishments and physical infrastructure across India. This investment is coming from multi-nation- al corporations such as Suzuki (investing $600 million towards a new manufacturing facility in Guja- rat), state governments (Andhra Pradesh government partnering with Toyota to set up a manufactur- ing unit in Amravati) and Indian conglomerates (Tata Power aiming to invest over INR 100 crore to set up 1000 charging stations. The last sub-section of the report addresses the current and future investors and funding agencies. It presents pointed insights for investors in three categories risks and challenges, opportunities and gaps, particularly crystal-gazing and outlining the way ahead. Before delving into the two sections, the methodology and approach to data adopted for the study are described in detail. The report includes six case studies depicting investments and ecosystem building in A2E and SM. It also has ve tables. EXECUTIVE SUMMARY 09 This study draws on both primary and secondary data. Primary data include in-depth interviews with participants representing various institutions of the fund- ing and investment ecosystem - investors, donors, funding agencies, sector consul- tants and investment experts. Secondary data include published and unpublished reports, data banks, and journalistic and academic articles. Secondary data was largely used to triangulate and nuance the insights generated from primary data collection. In some cases, secondary data shaped the interview process. At the time of the initiation of this study, AVPN had shared an interview guide with CIIE. With this as a foundation, interviews were aimed at understanding the partici- pants and her/his organizations approach and experiences with funding and invest- ment in the respective domains. Lessons and insights from the previous interviews were used to sharpen the focus of the subsequent ones. Using this approach, we were able to delve deeper and with focus into lesser-explored themes. We conducted in-depth interviews with investors, subject matter experts, support- ing organizations and research houses in A2E and SM sectors. Participants were contacted through network referrals by AVPN and CIIE. In total, engaging with 22 people, we conducted 27 interviews. Some people were interviewed from an inves- tors as well as an experts perspective. Interviews lasted between 25-60 minutes and were conducted in person or over a voice call. Applying a thematic analysis lens, we analysed the interviews and all secondary data. The objective was to get an insight into the current as well as expected or potential funding and investment scenario in India. Notwithstanding their innate connections, our analysis reveals dierences between the funding and investment landscape of A2E and SM sectors. In the following sections, we present the ndings and insights for the two sectors separately. METHODOLOGYACCESS TO ENERGYToday, the world is engaged in managing its depleting energy resources and mobilizing itself towards clean, environment-friendly, and renewable energy sources to meet the needs of the exploding population. Concurrently, it is constantly striving to ensure that this energy reaches the millions who dont have access to the electricity grid and other reliable sources of energy and are compelled to make do with unsustainable cooking methods and suer substandard living condi- tions, mainly in developing and underdeveloped coun- tries. According to United Nations Development Program (UNDP), more than 1.1 billion people remain without access to electricity and around 2.9 billion people still rely on solid fuels such as wood, animal dung, and charcoal for cooking and heating 1 . While energy in itself is an end that needs to be met for these signicant chunks of population, it is also an enabler and a means to achieve larger Sustainable Development Goals set by the United Nations. The absence of reliable energy services limits income-gen- erating activities and hinders the provision of basic services such as health and education. In a nutshell, access to energy is vital for social development, economic prosperity, and environmental sustainabili- ty, to name a few 2 . The International Energy Agency (IEA) denes energy access as “a household having reliable and aordable access to both clean cooking facilities and to electricity, which is enough to supply a basic bundle of energy services initially, and then an increasing level of electricity over time to reach the regional average 3 “. At a minimum, a basic bundle of energy services denotes several lightbulbs, task lighting (such as a ashlight), phone charging and a radio. Access to clean cooking facilities denotes access to (and primary use of) modern fuels and technologies, including natural gas, liqueed petroleum gas (LPG), electricity and biogas, or Impro
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