According to reports, at an age when most people are still wondering what to do with their lives, 25-year-old Abhishek Humbad is showing through his startup NextGen that being eco-friendly can also mean good business.
NextGen, which turns organic waste into energy and fertiliser, has teamed up with Mahindra & Mahindra-the largest genset provider to telecom towers in India with a 50% market share-and its unique bio-compressed natural gas will power more than 500 telecom towers.
The Bangalore-based startup’s bio-CNG will replace diesel in gensets for telecom towers and is 30% cheaper.
“When we first pitched our technology, tower companies told us we cannot allow interns to do an operation on a live patient,” said Humbad, an alumnus of BITS Pilani and IIM-Bangalore. He set up NextGen in 2009 along with Richa Bajpai, 25, also an alumnus of IIM-B.
The company first came into the spotlight when it set up a small waste-to-energy plant last year at the campus of information technology services provider,InfosysBSE -0.03 %.
NextGen, which has not received any institutionalfunding so far, has secured the intellectual property of its technology, in which bacteria breaks down more than 900 different types of organic waste and generates CNG grade gas with 97% methane. The other innovative aspect is the reactor, which is not only more efficient, but also cheaper than similar reactors made in Europe.
M&M officials, who were also on the lookout for promising renewable energy technologies, were impressed with NextGen. “The technology is good, there is a big possibility that, it can be a game changer,” said Palaniappan P, senior vice president of M&M and business head at Mahindra Powerol, its genset manufacturing arm. “We are very bullish.”
The Tower and Infrastructure Providers Association, which oversees about 4 lakh mobile towers in India, had been testing various renewable energy technologies, including solar and wind, to meet a Department of Telecom directive that required 50% of the all rural towers be powered by renewable energy by 2015, and 75% by 2020. But none made the cut.
NextGen, which currently has 35 employees and a bio-CNG plant in Andhra Pradesh’s Mahabubnagar district, proved its technology by powering a few telecom towers managed and maintained by M&M.
This plant was funded by a 65 lakh grant from the Royal Bank of Scotland Foundation and the Ministry of New and Renewable Energy.
The company plans to set up 50 plants in six months to power 500 telecom towers with an investment of around 50 crore. Once this project is complete, the companies aim to scale up and provide power for 10,000 towers within the next 30 months.
NextGen and M&M have adopted a pay-per-use revenue model for 10 years. Both companies will together earn revenues of around 35 crore per annum through this project. They aim to recover their investment of 50 crore in three-five years.
“It is a big bet for Mahindra to collaborate with small company,” said Amol Kotwal, associate director of energy and power systems practice at consulting firm Frost & Sullivan. “You can’t afford to let the tower go down even for a millisecond.”
What’s impressive is that a startup founded by youngsters has managed to get the backing of a multinational when funding is drying up. According to Bloomberg New Energy Finance, venture capital and private equityinvestments in 2011 were $337 million (about 1,820 crore). In the first three quarters of 2012 it was only $125 million.
But industry experts said startups like NextGen will play a crucial role for the telecom industry as the government pushes it to go green to reduce the industry’s carbon footprint and its dependence on diesel.
About 3.5 billion litres of diesel is consumed in India every year by telecom towers alone and cost about 8,500 crore, according to consulting firm AT Kearney. Another 300,000 towers are expected to be set up in the next five years, which could raise diesel consumption to almost 7 billion litres a year.