Top Voice: Anandhi Gokhale, MBA
Top Voice: Anandhi Gokhale, MBA
We're back with the next installment of our Top Voices in Sustainability interview series where we give you a fresh take on sustainability from inspirational energy professionals in the renewables space. As part of the interview series, our recruiters took the time to scour the globe for the world's most high-impact sustainability agents in order to bring our audience an insider's view on recent developments. We believe our agents are at the precipice of the innovation of ideas and occupy a privileged position as future leaders in the sector on a global scale.
Today, we'll be speaking extensively with Anandhi Gokhale, a renewable energy professional, passionate about all things sustainability and convinced that technology and business model innovation can drive a sustainable future. Anandhi speaks candidly to us about her interests in the energy sector from a global perspective and gives some insight into what she believes are the key strengths and challenges in the financing of sustainable energy in the APAC region.
Here's the transcript to the full interview:
Q: How have you been keeping during the lockdown period, what have you been upto?
Anandhi: The lockdown has not been easy for me - it took me quite a while to adjust to working from home. I've been a regular at the gym for years, so having to stop that took a toll both physically and mentally.
But I'm proud to say that I now have developed a daily routine which has helped me cope with the circumstances. I use an exercise app that motivates me to do short, no equipment workouts at home which have given me my energy back. I've also taken to baking a lot - both sweet and savory dishes (so not just those banana breads the internet is raving about)! I've really enjoyed experimenting in the kitchen - something that will certainly, stick even after things go back to normal.
Q: Tell us a bit about yourself, your trajectory towards a high impact career and explain briefly what brought you to this specific sector. Where do you draw your inspiration from?
Anandhi: I have always had a love for nature. Growing up, I would spend my summers hiking in the hills and forests around my hometown Bangalore in India. But the city and surrounding landscape has changed so much over the years - so when it came to picking a major in college, I was convinced I wanted to pursue environmental engineering. My tryst with solar began when I worked as a research fellow at the Indian Institute of Science under the supervision of Prof. J Srinivasan. We analysed the performance of the first MW grid connected solar project in the state and made recommendations for improvements to the local utility.
After my masters at Carnegie Mellon University, I had the opportunity to join SunEdison as part of a leadership development program. At the time, SunEdison was the largest developer in the world. It was a chance to work in a fast-changing industry on a variety of topics - I worked on new product development integrating batteries with solar in North America, evaluating M&A opportunities through the IPO of TerraForm Global and managing a portfolio of solar and wind plants in India. SunEdison eventually filed for bankruptcy, but the people I worked with were outstanding - I have never felt more challenged, excited and inspired to be working in the renewable energy industry. Infact, right before INSEAD, when the opportunity arose to work with SunEdison alumni at an innovative tech startup called SenseHawk, I grabbed it. SenseHawk is building technology that uses drone data to digitize solar.
My inspiration to do what I do comes from my mother, who's made me believe that nothing is impossible. The problem of climate change seems daunting especially at times like this when it seems that the whole world is in a crisis - but it also presents so much opportunity! It's what keeps me ticking.
Q: Tell us a bit about your time at INSEAD, what extracurricular activities do you get up to outside of your studies?
Anandhi: INSEAD has been an incredible whirlwind. It has been humbling and invigorating to be surrounded by such bright and talented people from all parts of the world. It's wonderful to think I have a couch to crash on in almost any part of the world! It's also very encouraging that so many of my classmates are so passionate about energy, sustainability and social impact. We have student run clubs for almost any topic of interest one could think of - through which we organize discussions with senior professionals from industry, panel discussions, business treks, etc. Even through the COVID-19 lockdowns, we've continued to have engaging sessions albeit virtual.
One of the things I am currently working on stemmed from a very innovative class on product management. The class was the first of its kind at INSEAD, where students developed digital prototypes to help INSEAD walk the sustainability-talk. We had the opportunity to work alongside product managers from Google, and design students from the Art Center College of Design to create a platform that would connect alumni and current students interested in sustainability, provide curated opportunities in the space and ultimately enable a vibrant ecosystem for sustainability related topics at INSEAD. I'm thrilled to be working with INSEAD's recently formed Hoffman Global Institute for Business and Society to help the product further.
Q: As a mid-senior professional in industry, what would you say attracts the largest infrastructure funds to utility scale projects in India and in APAC more generally?
Anandhi: The investment thesis around utility scale renewables tends to be the same world over, i.e. long- term contracted cash flows, proven and mature technology, and a direct, positive impact on climate change.
However, high returns are not easy to achieve in the developed markets of the west especially as tax incentives and Feed-in-Tariffs ("FiTs") are being phased out. Investors have turned to Asia because of the scale of the opportunity - the region's burgeoning population is hungry for power. Many governments in Asian countries have announced attractive Feed-in-Tariffs and capital subsidy programs in order to attract capital to the region.
Q: What do investors in APAC tend to look for in the perfect solar PV project? What are some of the key challenges when investing in the region?
Anandhi: Solar PV today is a proven technology. There are globally accepted standards for development, construction and maintenance for PV projects. However, there are a few considerations that are unique to the region.
The first is counterparty risk. In India specifically, over the last few years there have been several cases where the state utilities have tried to renegotiate the PPA ("power purchase agreement") tariff and terms which has spooked investors. Stable, contracted cash flows is the reason investors have flocked to renewables - so it would be prudent for governments to honor contracts and send out the right message to investors.
The other key aspect of diligence is the point of interconnection to the grid. Solar PV projects are often located in remote parts of the country while the demand for power is in another part. There is a need for quality transmission and distribution systems to carry the electrons generated to the regions that need it. Inadequate grid infrastructure has led to forced curtailment at the end of the solar PV project, hurting revenues because generators are not compensated for the energy that is not fed into the grid.
About the Top Voices in Sustainability Series
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"The investment thesis around utility scale renewables tends to be the same world over, i.e. long- term contracted cash flows, proven and mature technology, and a direct, positive impact on climate change." - Anandhi Gokhale
Q: What other sustainable development challenges would you say are being addressed with new equity in APAC and to what degree is the return on investment attractive to investors?
Anandhi: Asia in general is a very interesting market. Home to two-thirds of the world's population, with a predominantly young demographic implies that growth in this region is staggering. This growth fuels the need for clean water, energy access, healthcare, education, food security and access to capital. Simply put, almost any new startup in this region is creating impact in some shape or form and the return to investors is very attractive - both from an impact perspective as well as in dollar terms.
Cities like Bangalore and Singapore have become hubs for startup incubators and VC firms looking to invest in companies and technologies that are reimagining cities of the future. Dedicated funds are being raised for investments in water, energy and even recycling technologies. Consequently, these tech hubs have given rise to a spurt of new companies that are addressing these pressing challenges.
In the field of mobility, business model innovations like battery swapping for EVs and battery leasing, product innovations in e-scooters and charging infrastructure have been developed that are unique to the bustling cities of Asia. In solar, there is a push towards distributed generation through rooftop/carport installations that enable energy security for large corporates and manufacturing businesses. Waste management is being addressed through creative incentives for collection, segregation and recycling of municipal waste. What is interesting is that most of these business model innovations are developed locally through deep understanding of cultural/ regional nuances. Each city in Asia is different, so when it comes to sustainable development, tailored solutions are the way to go.
Q: What are your thoughts on sustainability linked bonds and the emergence of green finance to support the growth of renewables in emerging markets such as India and China?
Anandhi: China and India have certainly seen a rise in the number of green bonds issued - by governments, banks as well as corporates. Green bonds send a strong message to the market that the issuers are indeed committed to investing in projects that tackle climate change. However, I think there is a grey area in what constitutes a "green project". For instance, could we say that an energy efficiency project that improves utilization of existing coal power plants should benefit from the proceeds of green bond issuances? Hard to say. I think as the market matures, there will be more clarity demanded of the issuers. Investors are increasingly focused on ESG (Environmental, Social and Governance) linked impact - with this, issuers will have to improve transparency in reporting on use of funds.
Q: In your opinion, would you say the oil and gas industry are gravitating towards or away from financing green initiatives such as zero carbon and how sustainable are these approaches towards ethical forms of business - and to what effect are their value?
Anandhi: Investors' growing focus on ESGs has forced oil and gas companies to take action in order to protect their reputation in the market. Large fluctuations in oil prices has further underlined the need for diversification of investments to prevent over-reliance fossil fuels. These are some of the reasons that have propelled all major oil and gas players to make significant investments in green initiatives. I expect this to be a positive, growing trend in the years to come.
BP, Total and Shell all now have made commitments to shareholders towards a zero carbon target. While there are many discussions around whether "zero carbon" is indeed achievable or not and what constitutes it - I am more interested in the actions these companies have taken to deliver on this goal.
Each of these players has made significant investments in renewables - either through in-house development teams or through investments in some of the largest developers (for example, Total's investment in SunPower, BP's investment in Lightsource, Shell's investment in CleanTech Solar to name a few). They also have corporate venture arms that have been actively investing in EVs and electric mobility solutions, battery technology companies, IoT and software for the power grid, etc.
While these investments may only be a small fraction of their business today, these are early days and I believe that this is the set up for a long term strategy.
Q: How much influence has the focus on the United Nations SDG 7 had in guiding new investment in APAC?
Anandhi: The UN's Sustainable Development Goals have highlighted the key objectives that need to be achieved in order for the world to progress towards a better future. The SDGs in general, have helped provide a common language for both companies as well as investors to assess how companies are working towards achieving this future. Specifically, the SDG 7 - clean and affordable energy for all - has steered the conversation around renewables from the developed world where the industry was driven by tax benefits, to emerging economies in APAC and Africa where the investment is now impact-driven. Countries in APAC are where the bulk of the growing population is, where access to electricity has glaring gaps and where affordability is still a dream - all of which directly contribute to SDG 7. For investors and companies alike, investing in renewables in APAC is an easy checkbox of contributing towards the SDGs.
Q: What will the next 5 years hold in store for renewables in APAC?
Anandhi: I think the landscape of renewables is fast changing in the region. With land constraints but huge demand for power, offshore wind is beginning to take off especially in Japan, Taiwan and South Korea. While offshore wind produces more stable power, the costs are much higher due to the complexity involved in construction of these facilities far out in the ocean. I expect that the focus will now be on innovation in design, engineering and financing to help bring down the costs associated with offshore wind.
Battery technology is also going to be key. There is a push towards reliable, stable power by grid operators. While solar and wind are clean forms of energy, the amount of energy they generate changes over the course of year as well as with time of day. These fluctuations make it difficult for grid operators to balance the grid and provide a steady supply to consumers. As battery prices continue with the downward trend, it's likely that batteries will increasingly find a role in grid balancing and frequency regulation. Battery integrated solar hybrid solutions are also on the uptake especially for businesses that are looking for a cheaper, cleaner and more stable alternative to diesel generators (the primary backup in most Asian countries).
In more mature solar markets like India, it'll be interesting to see how investors respond as the FiT regime phases out and the price discovery takes the stage. I expect there will be more industry consolidation as the excitement of high valuation (but sadly low returns) deals subside and more patient investors play the long game.
It's certainly going to be an interesting and exciting next few years!
Thank you to everyone who made this interview possible. For more interviews in this series, follow us on Twitter @ibrgroupintl or connect with us on LinkedIn.