Keen on Solar Business? Make Sure You Read This

The solar energy sector is one of the fastest growing industrial segments worldwide. This naturally makes many businesses and entrepreneurs keen to enter this sector.

But once they start taking their first steps into solar, they realise that things are not as easy as they thought.

At Solar Mango, we have seen how entrepreneurs and businesses are finding it difficult to understand the solar sector in a way that enables them to make investment and diversification decisions.

Firstly, the solar growth story

Owing mainly to the fast decreasing costs of solar panels, the solar power sector has grown at a stupendous pace since 2010. Between 2016 and 2020, an average of 75 GW of solar PV power plants will be installed worldwide ANNUALLY – compare this with the total solar PV installed between 1980 and 2011 – just 40 GW!

Year on year, over $150 billion will be invested worldwide in solar between 2016 and 2020. Post 2020, these investments could be even higher. In India alone, Solar Mango expects average annual investments of $15 billion (over Rs 1 lakh crores) during this period. No one can deny that these imply significant business opportunities.

In addition to being an attractive business opportunity, solar sector also has the added benefit of providing enormous benefits to environment and society.

The above two aspects have made millions of entrepreneurs and businesses worldwide take a keen interest in exploring this sector.

Is solar profitable?

At Solar Mango, we have been observing the solar energy industry for quite some time; you could say, since the modern solar energy boom started. That would be about 2008 worldwide and 2010 in India.

Five years is not a long time in many industries, but in the case of solar, the last five years have been equivalent to a few generations.

But there is absolutely no denying that overall, the industry has seen phenomenal growth, and will almost certainly witness even higher growth for the next 20 years, if not more.

But the key question for many entrepreneurs is: Solar might be a high growth industry, but is it a profitable sector, especially for small and medium businesses and first generation entrepreneurs? Is it an industry that will benefit only a few while the rest will be left holding the bag?

Well, our answer is: If you choose your sector with care, the solar energy sector can provide you with very good medium-long term returns. Two qualifying terms merit attention: Choosing the sector with care, and a medium-long term perspective.

For example, you could end up losing money in some solar energy sectors today – for instance, many module manufacturers in India are currently doing quite badly, as the Chinese competition is making their panels unviable for many developer sectors. On the other hand, some solar power developers who got early in the game (and got some of the first National Solar Mission projects at a tariff of Rs 17.91/kWh) are making money hand over fist, and they will be making this for many years to come (these are 25 year PPAs).

Some residential rooftop solar EPCs bemoan the fact that it costs just too much to acquire a customer, while at the same time, there are many sub-component manufacturers who are quietly making profits by just catering to one or two large OEMs.

Talking of rooftop solar EPCs, Solar Mango is aware of at least a few companies that are doing well in the supposedly price sensitive residential solar segment. One of these companies, operating in Tamil Nadu, has managed to sell over 50 rooftop power plants, each of 3 kW costing 6 Lakhs each. You heard it right – they are even now selling, and selling reasonably well, rooftop solar systems at a price of Rs 2 Lakhs/kW while the rest of the market is struggling to sell it at even half the price. Surely they are doing something different from the rest?

We hope we made the point. Solar energy is unlike many other sectors in terms of the benefits it offers to a range of stakeholders (which includes Planet Earth!), but when it comes to the core business aspects, it is like many other business sectors: To make profits, you need to put in both mind and money.

Is Solar Such a Simple Sector as it is Made Out to be?

It is also well known that solar energy technology is simple and trouble free.

This has given rise to the misconception that the solar energy industry is also a very simple one. In reality, it is both simple and not so simple. It is simple when it comes to the actual implementation of solar solutions, because this aspect of the business opportunity is mainly technology dependent. But in the context of overall business models, drivers, challenges and the various business segments present, the solar energy sector is as intricate a sector as any large and diverse business sector.

Solar Mango’s Recommendations for diversification into different sectors

As we mentioned earlier, succeeding in solar needs you to choose your sector with care. A successful combination for any entrepreneur is one where he/she has chosen a sector in which he/she has core competence, as well as it is a sector with drivers that are positively aligned. Once these two are taken care of, the rest of the success comes from how well the entrepreneur is able to focus on the most attractive segments.

Let me illustrate: Let us say you are a small business person with little capital, and support service expertise and with a passion for and skills in marketing. It is not a good idea for you to choose hardcore manufacturing related opportunities in solar, even assuming that segment is booming (it is not, as of early 2016). In the second scenario, let us say you have chosen a sector in which service and marketing skills play a significant role – say, the residential EPC segment – you have to ensure that the drivers for the residential rooftop solar  segment are in place (which they are not in most states, as of early 2016). In fact, as a small business person, you would be better off choosing the industrial and commercial rooftop solar segment as many of the drivers (the economics as well as some state government policies) are better aligned for growth in this segment in the near future.

While it will be well nigh impossible for us to lay out the complete strategy for you in this post, I am providing some inputs on the types of opportunities within solar sector that are aligned for specific types of businesses/entrepreneurs

A range of opportunities in solar are available – across manufacturing, services and support solutions – each with its own potential, characteristics and constraints. While some opportunities require significant capital investments and thus might not be relevant to all sizes of businesses, there are opportunities that can be seized with small investments as well.

Let’s have a peek into some recommendations that Solar Mango has for solar diversification. The table lists down the suitability of different segments of the PV value chain.

Category Recommendation
Ingot/wafer manufacturing Large, well established industries with sufficient financial resources to compete against international players and who can wait for the market to come to them.
Crystalline module manufacturing Large enterprises as well as medium scale businesses that can gather resources to vertically integrate later.
Solar inverter manufacturing Enterprises that are active in the Indian power sector and can develop products for Indian conditions.
Monitoring systems Primarily for Inverter manufacturers, and recommends careful market analysis of partnerships if offered as a stand-alone solution.
O&M Small and medium enterprises that can network with a large number of developers, EPCs, and system integrators, and have the ability to operate across the country.
Solar financing Financers with significant financial resources and the appetite to invest in large, long-term infrastructure projects.


Beyond what are listed in the table, there are many sub-sectors and allied sectors that are appropriate for specific types of investors.

In fact, Solar Mango offers the Solar Profits Expert Guide which examines the different segments of the solar PV value chain and evaluates the opportunities and risks present in each. We are confident at Solar Mango that Solar Profits is a good starting place for you to figure out how best to make profits from solar.

Moreover, Solar Mango provides consulting services for corporates and small businesses keen on diversifying into the solar energy sector with strategic advice & critical market inputs.

To hear more on how Solar Mango can help your organization in diversifying into the fast growing solar sector, send an email to Ramya – < href=””>

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