Building an Analytics Product for Renewable Energy
PRODUCT STRATEGY
THE ASK
How can we grow beyond our first couple of customers and make this a viable business?
Many companies face a common challenge: after successfully attracting their first customers with their product or solution, they struggle to expand their customer base.
The reason?
The new customers have different needs that are not met by the existing solution. As a result, the company is unable to sell their product as initially planned.
The client, a $200 million IT products and services firm, was in the same situation.
After a decade building top-of-the-line IOT analytics solutions for the power sector, they realized renewable energy was the new frontier. By the mid-2010s, they were keen to make the leap to a greener future.
They found an early interested customer, who was looking for a partner to develop a solution to manage their renewable energy park. They spent a year building a solution for the customer. The first customer was delighted. They then felt they could approach other customers with similar needs.
Market signals, too, were promising. Renewable energy was increasingly being seen as critical to slow
Things, however, didn’t work as per plan.
New customers liked the idea, but when they saw the solution, felt it needed a lot of changes. Even worse, every new prospect seemed to find different elements lacking. The company now felt that they needed to go back to the basics and see how they could expand.
Promising market trends
In 2014, India had only 35 GW of renewable energy capacity. By 2022, this had increased to over 150 GW. India is now the fourth largest producer of renewable energy in the world.
As market activity picked up, it seemed likely that the demand for analytics solution would also grow. A deeper diagnosis was required to understand the market better.
The Diagnosis
Changing power equations in the value chain increased chances of adoption of analytics solutions
The first phase was a diagnosis, where we looked at market trends, industry structure and did a high level opportunity analysis of the proposed solution.
Rather than jump directly into the product, I first did a big picture analysis. After some secondary research on key players, I did multiple qualitative interviews with the Salient Qualitative Research Guide with multiple industry players.
Since this was a capital intensive industry, I spoke to people from the finance industry first. Post this, I spoke to people who were vendors to the industry, people who ran wind farms and solar parks and subject matter experts. Gradually, the structure and needs of different roles became clearer:
Financiers
- Usually PE firms or funds with mandates to invest in the sector
- Initial business case was built with a 25 year horizon with annual returns, which is the expected working life of a wind farm or solar park
- They were accustomed to a few years of gestation and some delays due to regulations and late payments from discoms
- Post the initial gestation, they were looking at annuity income. This made it easier to sell the developed asset to the likes of pension funds who preferred annuity income.
Wind Turbine manufacturers
- Due to the complexity involved, there were only a limited number of players who were manufacturers (OEMs) in the space.
- Typically, they would sell all turbines for a wind farm, and also undertake Operations & Maintenance (O&M) for the first 7 years
- Post this, they would negotiate with the park owners (also called Independent Power Producers or IPPs) on whether to extend O&M service or hand it over to the IPPs
Most OEMs also provided O&M services for the first 7 years as this was a lucrative revenue stream
We also conducted qualitative research with corporate transport managers and facilities managers. Some key points from the research were:
- Transport managers liked the idea of allowing flexibility for employees to choose transport
- They were always at the receiving end when employees were delayed due to traffic. To avoid this, they scheduled pick up timings well in advance to ensure employees reached office on time
- They were always worried about employee safety (especially women) as long as they were in company cabs. If there was any untoward incident, there would be reputational risks for the company.
- They felt they would be able to reimburse employees as long as bills were presented monthly and from a single operator.
IPPs vs OEMs (in case of wind)
- At the time of setting up a wind farm, the contracts were structured so that the OEM also handled O&M for the first 7 years
- The contracts usually had an availability or uptime clause – the OEM would guarantee that the asset would be available for generation for 97% of the time.
- While this seemed fair on the surface, there were other challenges:
- India typically saw two wind ‘seasons’ in a year – a high wind season around monsoons where wind speeds were high, and correspondingly, more energy could be generated, and. a low wind season, where wind speeds were low
- To maximize revenue, IPPs wanted their assets to run for 100% of the time during high-wind season. Any maintenance that required stopping of the turbine should ideally be done in the low wind season
- However, this was not always possible. Wind farms were setup in remote areas, and any repairs that needed equipment like cranes or heavy spares would see transport delays.
- OEMs didn’t always keep assets running during high-wind season, as prioritized usage of their repair equipment
- There were other long-term implications of the contract as well
- Typically, the first couple of years was seen as a break-in period for assets
- Post this, the O&M teams run by OEMs often did the bare minimum to keep assets running and to abide by availability clauses
- This meant that any repair which could extend the useful life of asset, or the amount of production beyond the first 7 years was often not prioritised as it was not in the OEM’s interest
Over the years, the industry in India had also matured, and there were some promising signs:
- IPPs were increasingly understanding the power of data.
- All turbines had many inbuilt sensors and streamed data to a local analysis spot. This was typically viewed through a local SCADA system by the O&M team.
- Due to increased competition, OEMs were now willing to share some of the data with IPPs. This would enable better oversight of the parks from a central location.
This augured well for a solution like what the company had developed. With the proper focus, we could drive growth in the market.
THE ENGAGEMENT AND OUTCOMES
Product design and strategy to win early clients
Problem Discovery
A couple of key issues needed to be sorted in this process:
- Whom should we design the product for?
- What ‘jobs’ would the product have to do? In other words, which key problems did the product need to solve for the target users?
Answers to these would help in product design as well as our Go-to-market process.
By now, the value chain of the industry was clear. We used the Salient Product Strategy playbook to understand whom we should target and what we could sell.
Focus on IPPs
The IPPs were primarily responsible for revenue generation. They owned the assets, but didn’t have enough data or analytics to ensure that they were operated optimally.
Problems to be solved
Our product could help IPPs do a detailed analysis of their assets, get the right maintenance done on time, and provide insights on variation of planned power vs actual power in their discussions with financers.
Since we had a rich understanding of the IPP space and key roles within them, we were able to put a matrix outlining key persona and their needs.
This helped both with product design as well as marketing outreach phase.
Product design phase
The existing product had a functional design, but customized to the first vendor. New prospects found the product extremely complex to use.
We began the process by listing out key customer asks and constraints from the business side. We prioritized these based on the Salient Prioritization framework to identify high-impact ones.
To win support, I helped the team first draft a business case for the redesign. For confidentiality reasons, the business numbers are not shared here.
Design & prototype
Over the next four weeks, the chief architect, UX consultant and I worked closely together to develop the product redesign prototype.
This design took into consideration a lot of needs we had already sketched out earlier.
Go-to-market - taking a 360 degree view
Since we were looking at winning new customers, we took at comprehensive approach to marketing.
Some key activities included:
- Ecosystem scan – we identified over 370 companies in India we pitch to
- We also realized that the US market was largely similar to India, and we could pitch to companies there with the same solution
- Identified and tied-up with Industry Expert for product and content validation
- Drip campaigns addressed at key persona
- A key pain point in the industry was around keeping track of all industry activity in the space. We started a weekly newsletter on industry events that got 70%+ open rates
- Identified key events in India and the US where we could participate with stalls
Customer wins
The structured product process paid off.
In about 9 months time, we were able to win 3 more clients in India, and a marquee client in the US.
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