This is the biggest venture round in India’s solar industry, with SolarSquare raising $40 million under the leadership of Lightspeed.

Before moving to residential solar in 2021, the Mumbai-based business sold to corporate clients for five years while operating profitably on a shoestring. It is currently the biggest operator of distributed solar assets in India, powering more than 20,000 residences and 200 housing complexes nationwide.

In an interview with TechCrunch, Shreya Mishra, co-founder and CEO of SolarSquare, stated, “This is the opportunity of a lifetime. “It’s not just an industry that’s growing superfast — it’s where profit and purpose align.”

SolarSquare’s full-stack service, which includes designing and selling the systems, installing them on the customer’s rooftop, obtaining permit facilitation, financing, and providing after-sales services, is far more alluring than competitors’ since it guarantees returns on solar investments and reimburses customers if systems fail to deliver. The typical total cost of purchasing and installing the system is approximately $1,500.

“If we promise you’ll get 5,000 units of electricity from solar but you end up getting only 4,000 units, we will pay you back for the balance 1,000 units,” Mishra said. “This makes solar like a fixed deposit for customers because return on investment is guaranteed.”

Interest in solar has increased recently as a result of new government incentives. The drive is required since, in contrast to nations like Brazil, where over 5% of households have solar, and Australia, where 35% of homes have solar, only over 1% of Indian homes currently have solar.

“Two years back, people only had textbook knowledge — they learned in school that solar is something good,” Mishra said. “They didn’t know how much it cost, they didn’t know about government subsidies, they didn’t know that the payback period is literally 4 to 5 years.”

Solar energy is anticipated to contribute roughly 280 gigawatts towards India’s ambitious aim of reaching 500 gigawatts of renewable energy capacity by 2030. A $3 billion production-linked incentive scheme to increase domestic solar manufacturing, a 40% basic customs duty on solar modules to safeguard local industry, and viability gap funding for utilities to construct solar infrastructure in remote areas are just a few of the incentives that Modi’s government has put in place to speed up the adoption of solar.

In order to guarantee consistent demand for solar electricity, the government also provides accelerated depreciation benefits, income tax holidays for solar projects, and capital subsidies ranging from 20% to 70% for rooftop solar installations. In addition, state utilities are required to make renewable purchase commitments. According to Mishra, SolarSquare assists its clients in locating and utilizing government incentives.

“India is the first country in the world to make net-metering, this exchange of electricity, a consumer right that makes economics more viable as you’re able to freely trade electricity with the grid,” she said.

The need for solar energy is gradually spreading outside of big cities. According to Mishra, “Solar is actually a national, Bharat sort of business, unlike quick-commerce or businesses that focus on the top 10-15 cities.” “People in Tier 1, Tier 2, Tier 3 cities as well as rural India — everywhere there are homes, people will want to go solar.”

With the new funding, SolarSquare plans to grow from 20 to 50 cities, although it is proceeding cautiously. “We’re not in the business of’moving fast and breaking things,’ as entrepreneurs,” she stated. “There has to be that level of seriousness when you’re working on a serious product like solar, playing with people’s lives and safety.”

The business intends to maintain quality control while collaborating with local partners in smaller cities.

The timing is favorable for SolarSquare. India has reduced permission processing from months to days and made net-metering a consumer right.

In a Series B fundraising round headed by Lightspeed, Lightrock joined previous backers Elevation Capital, Chris Sacca’s Lowercarbon, and Nithin Kamath’s Rainmatter. Additionally, the business, which has already raised $19.5 million, will make technological investments to create better tools for remotely monitoring and controlling residential solar installations.

In a statement, Lightspeed partner Rahul Taneja said, “We are excited to be partnering with Solar Square, which has quickly become the most trusted residential solar brand in India.” “Solar Square is well on its way to creating #hargharsolar, and the clean energy transition has moved from ESG PowerPoint decks to consumers’ homes.”

In 2024, Lightspeed made significant investments in 20 businesses in India, including Zepto, Physics Wallah, and Pocket FM. This agreement with SolarSquare is the company’s most recent.