Energy efficiency is a key component of energy transition initiatives. While renewable energy in India has evolved rapidly, energy efficiency has not kept pace. For India’s energy transition programs to scale quickly, commercial and industrial (C&I) units must adopt energy-efficiency solutions to reduce emissions.

In this exclusive interview with Mercom India, Manya Ranjan, Co-Founder, Two Point O Capital (TW.O Capital), a green financing platform, talks about the awareness levels of energy efficiency among C&I businesses and the challenges they face in decarbonizing their operations. He also gives an overview of his company’s green financing offerings for the C&I segment.

The renewable energy sector in India has evolved rapidly, but energy efficiency continues to lag. What are the key challenges that C&I entities face in adopting advanced energy-efficient solutions to decarbonize their operations?

India’s renewable energy costs have dropped significantly due to maturing learning curves and economies of scale.

Energy efficiency (EE), however, has lagged. Firstly, it spans varied segments, from cooling to compressed air, with highly contextual and site-specific projects, limiting replicability and economies of scale. While global capital deployment for the energy transition has increased, the allocation for energy efficiency hasn’t, especially at the distributed C&I level.

C&I entities face three main hurdles in adopting efficient energy solutions:

• Awareness: Customers struggle to keep pace with the rapidly evolving EE technology landscape
• Fragmented ecosystem: Deploying solutions typically requires managing 7–10 interfaces
• Lack of flexible financing: Solutions must be financed on the customer’s balance sheet only

Flexible financing products are scarce at the C&I level, and the fragmented vendor landscape limits turnkey options. Existing financing—holdco loans, invoice discounting, and working capital lines are rigid and don’t mitigate execution or performance risk. The challenge calls for a full-stack model that combines flexible capital, technical expertise, and program management so customers get guaranteed outcomes, not just the next steps.

Is there sufficient awareness among Indian businesses, particularly SMEs, about the performance gains and cost savings that modern energy-efficient technologies can offer?

There are three keywords in this question: awareness, modern technologies, and cost savings. On awareness, surveys consistently show C&I enterprises, especially in the small, medium and micro enterprise landscape, aren’t fully aware of the latest, most efficient technologies at their disposal. In technology, several trends are driving a rapid evolution, most notably electrification. For example, low-grade heating is getting fully electrified (think heat pumps), but this shift is still scaling in India.

Cost savings, unfortunately, are a systems answer. Unlike renewables, with simple benchmarks, EE systems need bespoke designs, limiting broad visibility into savings. Customers only grasp the benefits after designing the system to meet their requirements.

How do you see the technology landscape evolving for energy efficiency solutions? Is the pace of innovation comparable to what we’ve seen in the solar and wind sectors?

Let’s first appreciate that EE isn’t a single sector but a collection of sectors.

With renewable energy, the pace of innovation came from three vectors: core technology, systems effect, and digital. Core tech has rapidly evolved—MonoPERC is already giving way to TOPCon. Systems effect involves better construction methods, execution, and balance of plant, etc. Digital systems have unlocked better ways to run these projects, creating so much value.

EE follows similar innovation paths: evolving core technologies in cooling and heating, systems integration (e.g., combining chillers, cooling towers, and pumps for efficiency), and powerful digital tools to optimize operations. What’s more, the interplay of supply (e.g., renewables) and demand side levers (e.g., EE) creates another virtuous cycle of innovation.

We believe EE innovation matches, potentially exceeds, renewables given the tech diversity. It’s the deployment that needs to catch up now.

Globally, energy project financing has become more sophisticated, moving beyond traditional debt models. How is India’s distributed energy financing ecosystem adapting to these shifts?

Any sector’s evolution follows a similar path from captive ownership to third-party ownership to asset-as-a-service. We’ve seen this in IT—from on-prem to the cloud—and in renewables through the rise of the PPA model.

The enabler for this transition is structured financing, which supports diverse asset deployment models. Globally, players like Generate Capital and Sustainable Development Capital have pioneered long-term energy-as-a-service deals, aligning incentives around outcomes. This requires financiers who understand complex asset operations and can price risk appropriately.

In India, while large-scale renewable energy projects benefit from such models, distributed energy projects are still largely financed on customers’ balance sheets. Customers often face trade-offs between core growth capex and utility upgrades.

This must change. The distributed energy landscape in India needs to have the same flexibility as afforded to the enterprise ones. At TW.O Capital, we’re addressing this gap by offering flexible financing to C&I customers.

Tell us more about TW.O Capital and its core offerings. How can companies benefit from your solutions?

TW.O Capital is India’s first full-stack clean energy financing platform for the C&I segment. We are a registered non-banking financial company providing innovative, on and off-balance sheet financing solutions for distributed clean energy projects in the rooftop solar, energy efficiency, and wastewater treatment —backed by end-to-end program management, from installation to operations and maintenance.

We are engaging with India’s leading C&I players in sectors across pharma, auto, textiles, hospitality, retail, and hospitals, among others, and are equipped to finance a wide variety of interventions: chillers, boilers, heat pumps, air compressors, sewage treatment plants, and effluent treatment plants.

Our market-defining leasing product ensures a trifecta of wins for the customer: no upfront CAPEX, no incremental OPEX, and, in some cases, additional cash accruing to the customer.

How do you view the future of the energy efficiency market in India? What are TW.O Capital’s growth plans for the next 3–5 years?

Energy efficiency has long held promise for its simple premise: doing more with less. For decades, the world has pursued a lower energy footprint, and India, too, has reinforced its commitment through national targets for EE under its Nationally Determined Contributions.

The sector is poised for strong growth, driven by three key tailwinds: technology, new construction, and regulation. Innovation in core technologies is accelerating, as mentioned earlier.

Meanwhile, India is witnessing unprecedented construction activity, with over 70% of its 2050 built environment yet to be developed, creating massive demand for energy-efficient solutions. In terms of regulation, initiatives like the Perform, Achieve and Trade (PAT) scheme will further boost momentum.

At TW.O Capital, we’re focused on catalyzing this market through innovative financing and comprehensive program management. Over the next 3–5 years, we aim to become a dominant player in energy efficiency financing across key segments and the financing partner of choice for every C&I customer’s energy needs.

The solar industry has thrived due to supportive regulation, rapid technological advances, and mass production. What similar systemic enablers do you see for accelerating energy efficiency adoption?

Systemic enablers can come from both supply (capital) and demand (customer) levers. On the supply side, capital for small, medium and micro enterprise projects remains scarce and we need concessional finance or first-loss guarantees to de-risk early investments.

On the demand side, strengthening the PAT scheme in terms of compliance and coverage can create a meaningful push on demand. Additionally, certain benchmark efficiency standards can be created for key sectors to ensure compliance.

Finally, the draft proposal released for India’s compliance-based carbon market will also incentivize C&I customers to adopt efficiency measures.

What policy or regulatory changes should the government consider to strengthen the energy efficiency segment?

India has seen very consistent regulatory regimes when it comes to the clean energy segments. The support the government has provided renewables over the last decade or so has been a matter of great pride for all of us.

The energy efficiency segment has also seen policy interventions like the PAT scheme that create a progressively tightening regime for energy efficiency amongst the target segments. As mentioned earlier, this scheme can be strengthened further by expanding the breadth of sectors included and also creating better compliance, both of which are reportedly in progress.

The government has also been taking positive steps to create a robust domestic carbon trading regime. The Draft Greenhouse Gases Emissions Intensity Target Rules, 2025, were recently released, putting in place a compliance mechanism for the Carbon Credit Trading Scheme, 2023.

What is your perspective on the global green financing landscape? Does TW.O Capital plan to play a significant role in scaling green finance in India?

We believe financing has no color—it flows to avenues offering the best returns. Over the past two decades, global green financing has scaled impressively, driven by superior returns in renewables and electric mobility, a trend that is likely to continue. Despite the environmental, social and governance headwinds, green financing continues to grow, not due to mandates, but because green projects offer the best returns.

That said, access to capital at the distributed level—especially for small, medium and micro enterprises — remains a challenge. TW.O Capital plans to change by aggregating bankable, credible projects and using on and off-balance sheet structures to deploy capital into them.