1). Solar-power microgrid service in rural villages: Startup Mera Gao Power wants to have a total of 70 villages electrified with its solar panels, cell phone charging service, and distribution lines by the end of 2012. Co-founders Jaisinghani and Brian Shaad have been working on these projects for about two years, and their business innovation was to sell the solar power as a service. One microgrid system that can electrify about 50 households costs $1,200 and includes two solar panels, two batteries and four distribution lines. The villages agree to have the system installed and then households in the villages pay about 25 rupees per week for the service (the cost of kerosene for lanterns can be around 30 rupees per week). The system starts to pay for itself after a certain period of time.

2). One of India’s first megawatt-scale rooftop solar projects: Azure Power, a startup run by entrepreneur Inderpreet Wadhwa, is developing a project that puts solar panels on dozens of rooftops and shares revenues from power sales with the building owners. Five-year-old Azure is venture capital backed and engineers, builds and operates its own power projects and sells the electricity to utilities. Most of the at least 56 MW worth of solar projects that Azure has built are ground-mounted projects, but more recently Azure won this deal to build part of a huge rooftop system in the Gujarat state government. Azure plans to install solar panels on over 60 rooftops and complete the project by March 2013.

3). 600 MW of solar in Gujarat: The Indian state of Gujarat in April threw a big party to celebrate the commissioning of 600 MW of solar energy projects over a year. Much of that occurred (214 MW) from a solar park in the Patan district. But over 50 companies have built solar power projects in Gujarat, including SunEdison, Tata Power, Lanco Solar, Moser Baer, Adani Enterprises and GMR Gujarat Solar Power.

4). The aspirational country goal: The National Solar Mission in January 2010 set a goal of installing 20 GW of grid-connected solar and 2 GW of off-grid solar by 2022 — that’s 3 percent of the country’s power using solar by 2022. This has led to auctions won by developers at rock bottom prices (almost too low to get them done profitably). Individual states also have their own solar plans.

5). SunEdison experimenting with rural projects, too: While project developer SunEdison has brought 45 MW of solar projects in Gujarat online, it is also looking at how it can make solar panel projects work in rural villages. Its project will focus on building a business model for designing, installing and managing solar systems for 29 villages in India’s Guna District. The 29 projects will be funded through a combo of government grants and private funds from other investors and corporations.

6). Selling solar like cell phone service: Startup Simpa Networks has developed a home solar panel product for off-grid customers controlled by a mobile, pay-as-you-go system. Customers pay for only the electricity produced by the solar panel at their home, in addition to a small upfront payment for the system. The basic solar system is 25 watts to 50 watts, which can power a couple of CFL lights, a mobile phone charger and maybe a fan or a TV cable box.

7). Solar teaming up with water use: One of SunEdison’s solar projects is a 1 MW installation over nearly half a mile of the Narmada Canal in the state of Gujarat. It will produce electricity and conserve land and water. Other companies are looking to sell solar-powered projects to the agricultural and water industries. Claro Energy is looking to sell solar-powered irrigation pumps to Indian farmers.

8). Solar lanterns: Startup d.light recently celebrated its fifth anniversary and the company has reached the goal of 7 million people using its solar-powered products (see photo) in 40 countries. The company says sales growth between May 2011 and 2012 was 400 percent and d.light focuses on India and countries in Africa. The company is backed by Indian VC firm Nexus Venture Partners, Indian conglomerate the Mahindra Group, venture firm DFJ, and others.

9). Giant solar thermal projects: Areva Solar is building a 250 MW solar thermal project in the northwestern part of India (in the state of Rajasthan) that will use mirrors to concentrate sunshine onto water filled tubes to produce steam — steam that will drive a turbine and make electricity. The project is supposed to be half way done by spring 2013.

10). Solar for cooking, heating, making stuff: A company called Flareum sells solar concentrating systems that can be used for cooking, and for producing steam and heat for industrial applications. Siemens is using some of the solar systems at factories in Bangalore.

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Speaking by phone from his home in New Delhi, Wadhwa told us he had no experience in solar energy development before he started venture-backed Azure Power in 2007, though his electronic engineering degree has come in handy in technology assessment and project engineering. After years of working at companies such as Oracle and a consumer marketing software startup Loyalty Lab, he wanted to do something “more socially conscious.”

Up until now, Azure Power has been building ground-mounted solar power projects in India, in states such Gujarat and Punjab, where Azure built its first megawatt project in 2009. Since then, the company has completed or is building 56 MW of projects, Wadhwa said. An independent power producer, Azure engineers, builds and operates power projects to sell electricity to utilities.

The company recently won a project from the Gujarat state government to build one of the two 2.5 MW rooftop projects. The projects are part of Gandhinagar Photovoltaic Rooftop Programme, which means it will start in the city of Gandhinagar, the capital of Gujarat, and expand to other parts of the state later. Gujarat has been teeming with solar power development thanks to its solar incentive program, and it recently celebrated the commissioning of 600 MW of solar power plants.

“Today power is built in remote areas and pulled into cities to meet the demand. You can change that equation and start generating power in the cities,” Wadhwa said. “This makes sense only when you have a power deficit. Cities in India have a huge power shortage.”

Electrifying rural areas

About 25 percent of India’s residents have no access to electricity, according to the International Energy Agency’s “World Energy Outlook 2011.” That means 288.8 million residents don’t get to turn on the lights at night. About 80 percent of India’s electricity comes from power plants that burn fossil fuels such as coal and natural gas, according to the U.S. Energy Information Administration. As Katie Fehrenbacher found out during her trip to India last year, blackouts are fairly common even in modern areas of the country.

Azure plans to install silicon solar panels on over 60 rooftops – 2MW on government and commercial buildings and 0.5 MW on residential ones – and complete the project by March 2013. Torrent Power, a private utility, will buy power from Azure at 11.21 rupees per kilowatt-hour for 25 years. Azure, in turn, will pass on 3 rupees per kilowatt-hour to rooftop owners, Wadhwa said. The national average for wholesale electricity from conventional sources is around 2-3 rupees per kilowatt-hour and about twice of that for the retail price, he added.

Azure has lined up money for the rooftop project, though Wadhwa declined to disclose how much or who the investors are. The company has gotten financial support from organizations such as the Export-Import Bank of the United States and International Finance Corp. (IFC), part of the World Bank. Export-Import Bank approved a $16 million loan to Azure last year for buying solar panels from First Solar and other equipment for a 5 MW project in the state of Rajasthan. IFC committed $10 million for two projects.

Last year, the solar power producer raised €10 million ($13.6 million) in convertible debt from DEG, a member of the KfW state banking group. The bank would convert the debt to equity, but it didn’t say what stake it would hold in Azure. Azure raised an undisclosed A round from Foundation Capital and Helion Venture Partners in 2008.

The foray into rooftop solar will afford Azure some lessons about aggregating small installations into a portfolio to attract investments and operating distributed solar projects. The company is interested in off-grid solar projects, but it has to figure out the right business model and mechanisms – such as prices and payment process – since the customers won’t be utilities but consumers themselves, Wadhwa said.

Photos courtesy of Azure Power

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Kiran hits it big

During an interview this week in Kiran Energy’s Mumbai office, Rosling told me how Kiran has for the moment become “the biggest focused solar power developer” in terms of contracts in India. There are other large conglomerates or power companies that have potentially larger portfolios, but Kiran is currently the leader in terms of the solar-specific folks, says Rosling.

Kiran has 75 MW’s worth of solar contracts, including 50 MW that the company won just weeks ago in the latest Indian government solar auction (which Rosling called “nail-biting” and “exciting.”) The government has been bidding out projects under a goal to deliver 3 percent of the country’s power via solar by 2022: That could eventually be 25 GW. Individual states also have their own solar plans, and Kiran has a 5 MW project with the state of Rajasthan.

Kiran is just starting to hit it big. The company will open its first plant this month, and it has also managed to score a joint venture with Indian conglomerate Mahindra called Mahindra Solar One, of which Kiran is a majority owner. “When we signed the contract for the JV with Mahindra we were just two guys,” says Rosling.

Rosling’s counterpart is founder Ardeshir Contractor, formerly the head of KPMG’s Investment Banking business in India. Rosling, a former executive director of Tata Sons, tells me that Contractor came to him with the idea for Kiran and persuaded him with the pitch about the business model and the potentially massive size of the Indian solar market.

In a market that could potentially be controlled by Indian conglomerates and family businesses, Rosling emphasized that Kiran Energy is “professional” and “thinks corporately,” which is why Mahindra wanted to partner with them. “We are playing above our weight,” says Rosling.

Indian solar market

The Indian solar market only had 54 MW installed in 2010 and is expected to jump to 3 GW by 2016, according to the researchers at Greentech Media. That’s the equivalent of zero to 60 in a blink of an eye, and a variety of players have emerged over the past couple of years to try to play in this potentially huge market.

Rosling says he sees four types of players that Kiran competes with: large power companies like Tata Power; Indian conglomerates; foreign solar developers like SunEdison; and pure-play Indian solar companies like Kiran. The latter also includes direct competitors Azure Power, in New Delhi, and SunBorne Energy, in Haryana.

Right now the Indian solar market is being driven by the government mandate, and solar is about double the cost of wind in India. Kiran’s latest contract for its 50 MW project is for 9.34 rupees a kilowatt-hour. That’s pretty low compared to contracts a year ago, but wind, the cheapest clean power available in India, is closer to costing between 3 and 5 rupees per kilowatt-hour.

But those economics will likely change over the next few years. “The cost for our solar projects dropped by 40 percent in 2011,” says Rosling. The price of solar panels has plummeted this year, and while that has caused many solar manufacturers to struggle, it has been great news for solar developers. And most think that down the road, the economics for centralized solar PV farms will work without government mandates.

Part of that is because India is hungry for any kind of power — clean or dirty. Along with India’s rapidly growing GDP comes the population’s growing desire to consume more energy. There are regular rolling blackouts due to the constrained supply of electricity in many cities, and many Indians have no access to grid power at all.

“India is one of the few countries in the world where there’s demand for power, there’s land, and there’s sunshine. India is going to be an absolutely huge solar market,” says Rosling.

U.S. solar in India

Kiran’s investors include $50 million raised from U.S. private equity firms Bessemer Venture Partners, New Silk Route Partners and Argonaut Ventures — and yes, Argonaut is the firm that popped up in the media this year for backing now bankrupt solar panel maker Solyndra. It is widely agreed upon that solar project developers are a significantly less risky investment than solar manufacturers.

Kiran’s Series A funding round will take it through 2011 and 2012, says Rosling. But the company will be raising more funds to scale up and to finance more plants.

Kiran is also working with some U.S. solar makers for its contracts. Kiran went with SunPower for a 5 MW project and Japanese company Sharp for 20 MW. The contractor for the recently won 50 MW is yet to be disclosed, but Rosling says Kiran is talking to some U.S. companies.

Over the next three years Kiran Energy wants to build projects of 200 MW, says Rosling. To put that in perspective, that’s about a fifth of the total amount of solar that has been developed in India to date— from a startup that employs two dozen people.

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