The New Energy Order Ravi Dharamshi At Transition Vcs Lp Mixer

TITLE: The New Energy Order | Ravi Dharamshi at Transition VC’s LP Mixer CHANNEL: ValueQuest DATE: 2026-06-29 ---TRANSCRIPT--- So we could actually clearly see the trend going up. Over the last one hundred years.

Okay, we got some of it. Yeah. I did. I did. I did. [music] You describe energy transition as not just a climate change opportunity but really a massive financial opportunity. Let’s go fast forward say 2047 20 years from now. What are people still underestimating about it and do you think this will really be a larger trend compared to the technology trends or the infrastructure boom that we’ve seen in the past? Thanks Surya. And first of all, let me take the opportunity. Thank you for inviting me and uh I must say that you and your team has done a wonderful job. I think one of the reason why I chose to associate with you guys was that you were early on in catching the trend and this is a space rather the stages of the company at which you are operating was very very complimentary to how we look at things. We as a house much more growth stage and late stage focused and VC is not our domain. So congratulations to you on wonderful uh fund performance as well as uh you know, funding the entrepreneurs of tomorrow. Prashant. With that allow me indulge me a little bit. I’ll just take a step back and explain to you how I look at this and why I believe this is part of one of the largest global industrial capex super cycle that’s playing out. And once we understand the drivers then it will become very apparent that you know, this is not a discretionary spend anymore. It It is an indiscretionary spend. It is inevitable, and it is a large spend that is playing out. What makes it so? Uh you know, for 30 years, uh since 1990s to 2020, the world was built on the premise of cost efficiency, just-in-time. Uh few events happened in the last half a decade uh that has changed the world view for a lot of people. COVID, first of all, uh made people realize how fragile the supply chains are. Uh Russia-Ukraine war uh made people realize that uh that Europe is completely dependent on Russia for its energy supplies, and they have completely de-industrialized. Uh then we had the semiconductor uh you know, shortage spanning out, which made people realize what kind of a choke point Taiwan is. And now the recent war that is going on is again making is giving an energy shock to the world and making people realize that, you know, uh it is not for my altruistic motive that uh I need to move away from fossil fuel towards green energy, but because it makes economic sense, because it makes strategic sense, because this is about energy independence and energy security is why I need to move away from fossil fuels. So, uh and uh this uh entire theme is uh the drivers are essentially redundancy, resilience, and sovereignty. Uh people uh the countries are realizing that there are certain key critical sectors where where they need control over their uh supply chain. So, whether it is uh you know, semiconductor, defense, aerospace, uh energy When I say energy transition, I’m talking about every technology that is involved in it. You cannot be dependent on a rival nation that can possibly weaponize the leverage uh of having uh you know, being a supplier to you. Uh that is what is driving this entire uh you know, the move towards becoming self-dependent in these critical technologies. And that and all these sectors are kind of feeding on to each other. The This is uh So, we are in a middle of this energy transition. It is not that you’re only transitioning. We are actually uh duplicating a lot of the infrastructure. So, yes, we have to grow the fossil fuel also while uh transitioning to a uh you know, greener fuel. So, once you realize that that the uh our energy consumption itself is going to go through the roof. That uh we cannot only be dependent on one or two technologies. In fact, it is the entire technology the entire bouquet of technologies which is going to come in handy. Uh For example, the data center boom or the AI led data center boom has already become 5% of energy consumption in the US and it is going to become 10%. Such a uh country whose GDP is growing at 2% 3% has its energy growing at 5% 6%. I’m sure soon enough India will also start growing at 8 10 and maybe double digits also. So, if that is the case where the energy consumption is growing so fast and all these sectors are essentially uh plugged into energy. That means we will have to uh build the energy infrastructure as well as uh you know, move to a cleaner energy infrastructure. And that is why I believe this is an entire entire uh global industrial capex cycle that is playing out in which the biggest one of the biggest theme is energy. Even AI for that matter, the back end is all energy infrastructure. Every time you put in query, it is 10-20x more energy intensive than a simple Google search. So, everything is feeding into this industrial capex cycle and that is where I believe energy transition as a theme has got further wind beneath its wings and it’s going to become only bigger. Absolutely. Thank you for a detailed breakdown and we’ll touch on the BI opportunity and how it’s powering for sure. But for a lot of people in the room, when we say energy, the first thing they think of is solar, right? And it seems like is solar getting crowded or is it still in its first innings? And if it is, then what’s the next big opportunity in this value chain? We’d love to know what do you think about it. So, absolutely no doubt about it that a lot of people are now talking about solar, but just because there’s a consensus and people talk about it does not mean that particular trend has peaked. What we need to ask ourselves is where are we in terms of penetration? I do believe that solar will eventually become almost anywhere between 50 and 70% of the energy basket. We are barely touching double digits as of as we speak. So, in terms of power generation I’m talking about. In terms of installed capacity it might be, but in terms of power generation we have barely 10-11%. So, we are nowhere close to peaking out in terms of the installation of the solar. But solar value chain has many other many components, right? I mean, there is pump, there is rooftop, there is you know, the entire value chain of manufacturing solar PV. But and there will be this is a evolving opportunity. The value might move, you know, making modules is commoditized and that is not where the value is probably and value might have moved to solar cell currently and maybe in future it it might go to wafers. That’s how the regulations are evolving. That government wants you to basically use the cash flows from the window of opportunity that you got to capitalize on and use that to backward integrate so that eventually we become energy independent rather the supply chain becomes independent of China. Now, but that is the solar value chain. Now, services and equipment that are supplying to solar is also a a real opportunity. So, whether it is going and whether it is services improving efficiencies or the next technology like perovskite that you mentioned are all still evolving opportunities. One of the framework that we use as since we are just to give you a perspective that we are growth stage investors. So, we come in at a point where, you know, the technology has crossed that chasm of, you know, it’s no more a proof of concept. The cost curve has also reached a point where there is an inflection and mass adoption is an inimitable thing. The regulatory tailwinds are also there and on top of it there is buying from all stakeholders. That’s when we believe that technology or the particular solution is really going to scale up and that is where our we believe that our ability to deploy capital and capture that S curve is far higher. Of course, since we come in at that stage, we will always be minority shareholders and not a much bigger shareholder like you could be at a VC stage. But the at the VC stage there are there are multiple chasms to be crossed in terms of technology, in terms of economics, in terms of regulation, and also there are competing technologies which are evolving. So, we don’t really know which one’s panning out. Sorry, well, that was a long answer. Coming back to your solar question, so I think the opportunities might be shifting within the ecosystem, but I think it’s long way from getting saturated. Absolutely, long answer. Those are more than welcome. We would love to know more and pick your brains. First, let’s talk about AI. It’s a global trend right now. Everyone’s talking about it, but the growth of AI is fundamentally constrained by power, right? So, there’s an intersection of energy transition and AI. Where would investors see very interesting opportunities at this intersection? Whether it is solar or AI, the bottlenecks are clearly grid connectivity. There are internet solutions coming up even in US. For example, US does not have a national grid. In this that is one area where India is actually much better off than US. But, so the hyperscalers who are there have been told, you have your own source of power. You develop you put your own power plants. And interim solutions like gas-based power, gas turbine based power is what is coming into effect. So, that that tells you that because the speed of putting a speed is of essence for putting up these data centers, so economics are being pushed aside, or the maybe the best technology solution is not what is getting implemented. Right now, it is about just get my data center on ground up and above implemented before my competitor does that. There is a land grab going on. So, which is obviously leading to but eventually we will have to solve for the grid connectivity. That is where the biggest bottleneck is. And if I were to add one more, the other bottleneck is execution. And if you double click on even the grid further, you will realize that it is the transformers or it is just putting the transmission lines or re-conductoring some of the lines. So, there are many opportunities within the grid which are the bottleneck at this point of time and the drivers for which are both the renewable adoption as well as the urgency in putting up data centers. I mean, all of this sounds like music to our ears because there’s so many problems to solve which means there are so many opportunities, especially in early stage. A lot of our portfolios are solving for these in piece meal but put together, I think the next couple of decades will be very interesting for India to build I feel and engineering solutions. Moving forward, um because of energy transition, of course, and every time there’s a new trend or new opportunity, there are industries which are which would be disrupted and then there would be certain industries which would emerge. Which ones of those do you think stand the highest risk of disruption at this point of time and the ones which are underrated eventually would really rise because of this shift in energy? And so, one thing all whenever the technology is not yet stabilized, wherever the learning rates are still very very high. As in, when I say learning rates, I’m talking about how quickly the prices are dropping or how quickly the other alternatives can come up. Those technology technologies will always be at some risk at some point of time. And one more thing I would say is that yes, this is a long-term megatrend, but it is still a cycle. The cycle might last 10 20 years, but you have to take the advantage of this cycle, generate cash flows. Don’t be caught up only on the technological aspect of it. Generate cash flows and use that cash flow to uh build uh you know, adjacencies, build uh diversify your customer base, or geography base, your uh product and solution base, so that if and when the cycle turns, you have built exceeded other businesses to uh de-risk yourself. So, uh it it is too uh early for me to say this is the particular industry that will get uh disrupted. Every entrepreneur should treat its business as it will get disrupted and should constantly be looking for uh uh you know, solutions or the next big thing in its industry. I absolutely uh talking about cycles uh wash trend we could actually spot an early trend of the memory chip cycle, especially in Micron SK Hynix, and that was because of one of our MIS calls because one of our portfolio company uses memory chips, and they kept saying uh the prices are going up, deliveries delayed, and now they’re saying prices will be at delivery dates, and then they used to get hundreds of calls to buy an under chip, so we could actually clearly see the trend going up. Uh for the last one year or so. Okay, what’s some of it? Yeah. [laughter] I did. I did. Uh all of us did. So, it is a pure trend, right? And then talking about catching up. But anyway, coming back uh where do you It is very evident from this conversation that there is a need, and India has the capability to solve for it. Uh but where do you see the bottlenecks? Is it capital, technology, talent, uh government intervention? Talent. and execution. I don’t think capital is going to be an issue. I think government of the day is very seized of the issues and they are completely backing this particular trend. And we can see it in everyday in the way the policy stack is evolving that they are very much in favor of making this transition, making the supply chain resilient. We are even going ahead and putting up semiconductor plants. Even though it might be of a dated technology, but this is how you get the component ecosystem in. We started off with mobile assembly, but eventually we are moving towards electronic component manufacturing. So, we are trying to solve for something that one we don’t have a manufacturing base, so we need to get the OEMs. And second, we have to draw them away from China which has kind of perfected that. So, we need to protect them as well as we need to bring start with the lower end and eventually progress to a higher end in terms of value addition. So, I don’t think regulation is an issue. Government is very supportive. Capital is also available. The fact that you guys started off with wanting to raise 300 crores and ending with 723 crores, I’m sure if you kept your fund open for some more time it could cross four digits as well. So, capital is also not a challenge. So, it is only about talent and execution. And talent for sure is going to be a bottleneck. So, any entrepreneur and any company that is able to become a magnet for attracting talent because of the kind of work that they are doing will do well. And of course that talent has to then execute it, execute with the constraint that they are operating in with the and in the timeline where they can actually beat the competition as well. So, speed will be of essence always. And I think these are the two bottlenecks and any company that is solving for that and at scale will be a huge winner. Uh, that’s actually what we hear in the board meeting with our portfolios that the founders are fired up to execute, but demand side is also not a problem, but really getting the talent, training them, and scaling is the challenge. And of course, we are very grateful including you and everyone in the room to have supported us at Capital. So, thank you again for that. Um, India has been one of the largest energy importers and uh, it’s been the headline for the last couple of months. You’ve been talking about it and energy security important for the last 4-5 years. What should we do to actually uh, become an energy powerhouse or manufacturing powerhouse so that we could not face the same problems that we faced over for the last couple of global shocks that we’ve seen? Uh, so uh, first of all, we should So, what what is China doing? And we should borrow from the China’s playbook, which is over capacitize. You should not be and for that over capacitalization, you’ll have to uh, maybe suspend uh, the capital capital market forces a little bit, which is what exactly that they are they are doing in the renewable supply chain. A lot of people say, you know what? Solar PV is commoditized, China is there, and uh, there are large guys or this will not create value. But yet, there have been big winners out of that. Why? Because government understands the strategic importance and they have built the ecosystem in a way where the economics are suspended for a period of time so that the participants can make money. And that is what is required of the day [snorts] eventually across everywhere. And yeah, I mean, I would say over capacitize. That’s exactly what I think uh, I don’t know. Mr. Amitabh Kant made a statement about that that instead of 500 GW, we should be building 1500 GW. Uh, so we have to become energy surplus. We cannot be thinking of just about meeting our you know, net zero goals. We have to think of over capacity because if you want to take you know, manufacturing contribution to the GDP from 10 12% to 24 25% if everything will be energy intensive and we need to ensure that this manufacturing base has the basic ingredients which is energy, people and infrastructure to support and the ecosystem to develop. So, that is how I would be thinking about it and I think it’s not like government has not thought about it, but I think we can do much better on the implementation and execution part of it. Absolutely and this final question, say 20 years down the line, what would separate investors who just merely participated in energy transition versus those who build companies which are enduring or generating national wealth out of this mega trend? A very interesting question. I Barely a few days back I wrote an article in Mint which speaks about who really makes money in a mega trend and essentially what I was trying to say is that most investors stop at identifying a trend and then buying whatever name that you know, comes up in that mega trend. But I think if you can identify which are the companies that are solving for the bottlenecks, which are the companies which are indispensable in that value chain and which is the industry structure which allows you to capture that value. For example, I mean I’ll just give you one example of a listed company. We all saw the solar adoption going through roof and what we understand that renewables the solar generation tends to happen in far off places like Kutch, Rajasthan or Leh-Ladakh, those kind of areas and you need to draw that power to the areas of power consumption or connected to the grid and that means you have to drawing power over 500, 700, 1000 km will require a technology where the transmission losses minimum and once you realize that there is there are only two or three companies that have that technology of HVDC or 765 kV which is GE, Hitachi, Siemens and then you realize that this company owns almost 65-70% of the market. The inevitability of the opportunity combined with the oligopolistic nature of the industry that’s catering to that is is how the maximum value gets captured. Now, this is just one example. So, either you need to have technology or you need to be part of big you know, industry structure where there are not too many people. That is where the value will get captured. Well, we are very excited about this. Thank you so much Ravi for blessing us with your presence and time and also backing us. Thank you everyone. Thank you for having me. Appreciate it.