Incorporated in 2014, Freyr Energy is an integrated solar solutions provider for small solar power systems, with operations in India, Ghana and Nigeria. The company’s key focus areas are rooftop solar and rural electrification. Its rooftop solar business is dominated by private sector projects, whereas the rural electrification business is run through government projects. Apart from rooftop solar, the company provides solar solutions for water pumps, petrol pumps and microgrids.
Freyr Energy’s co-founders Radhika Choudary and Saurabh Marda believe that the key challenge in the solar industry is the inability of companies to scale up efficiently and not the actual project execution. A local presence is seen as essential to grow in the small-scale solar energy segment. However, the high cost of customer acquisition in local areas can lead to inefficient growth of companies. “We felt that there was a more efficient way of going about it and working on software, rather than on hardware, was seen as a solution to this problem,” says Marda. Thus, the company’s flagship product “Freyr Energy SunPro” was developed. It enables users to run their own solar business with minimal investment and without any prior solar, electrical or mechanical background.
SunPro helps customise a solar power project through built-in tools that use data on solar irradiation, local solar policies, nearby vendors, etc. According to Marda, typically, there is a lot of to-and-fro between the customer and the provider regarding the project design and cost, which can be very time-consuming. SunPro provides an optimised and detailed techno-commercial proposal to the customers. This happens immediately after a few basic questions are answered and short site survey is done. Therefore, optimum system ratings can be offered to the customer at the lowest prices in a single meeting. Further, the software is regularly updated to incorporate new policies and vendor data, which reduces the number of consultations with the customers.
In addition to providing solar solutions, the company assists its customers in securing funds from banks. The initial assessment is done within SunPro, after which the final decision is made by the bank. Currently, Freyr Energy has tied up with Axis Bank to provide collateral free loans of up to Rs 5 million to micro, small and medium enterprises. It is now working with other banks such as the State Bank of India (SBI) and HDFC to add them to the SunPro platform.
Rural electrification and rooftop solar
In the rural electrification segment, Freyr Energy mostly takes up projects tendered by the Rural Electricity Corporation of India in villages with 15-45 households. Many of its projects are located in remote Naxalite areas where transportation of materials and equipment can be a challenge. In the rooftop segment, Freyr Energy works as an engineering, procurement and construction provider of solar power systems with capacities ranging from 1-200 kW. The company usually works in capex mode, but with banks now more open to providing long term project financing of 10-15 years for rooftop solar plants, Freyr Energy has started signing power purchase agreements with select customers.
Future plans and outlook
According to Marda, although there are initial hurdles of convincing consumers about the benefits of rooftop systems, identifying appropriate financing mechanisms and working with complex and rapidly changing policies and regulations, the situation is slowly improving. “Freyr Energy has designed and installed over 900 systems in India across 16 states and has a SunPro user base of about 1,000,” he says. In the past four years, Freyr Energy has recorded a growth rate of about 1,500 per cent. The company turned profitable in 2017, and its revenue is expected to exceed Rs 1,000 million in 2019. In addition, the company plans to expand its operations to 25 countries in the next two to three years. Freyr Energy’s international expansion plan involves sourcing out its software and supplying the components to companies interested in starting their own solar businesses. Similar to the Indian model, the customers will be linked with local financiers to obtain low cost funds. The company has received an initial funding from SBI as well as a Netherlands-based investor and is in the process of raising additional capital. With its unique offerings and a successful business model, Freyr Energy is likely to make a significant impact on the solar energy market.