Keeping up with Climate Tech vol. 3

Manufacturing is often overlooked as a component of energy efficiency. When someone says energy efficiency, you might think of actions we take as individuals (e.g., turning off the lights or using electric vehicles), or even actions taken by corporations (e.g., investing in carbon offsets). But rarely do we consider factories.

The United States has almost 300,000 factories, and a large number experience frequent power disruptions due to weather events or infrastructure issues. And there are not too many players attempting to solve their problems.

Enter Nirmaan, a startup founded by Harvard Business School students Adi Prasad MBA ‘25 and Adhitya Raghavan, MBA ‘25.

Both Raghavan and Prasad grew up in parts of India where power supply was inconsistent.

“There’s definitely a personal angle for both of us,” Raghavan, who is also a Cheng Fellow at the Kennedy School’s Social Innovation and Change Initiative, told the Harvard Technology Review in an interview. “My dad is a small factory owner and I saw that rising electricity prices and unreliable electricity were the most common stress points for him. Adi saw something similar in suburban India. Life has taken us down the path where we’re both mechanical engineers, both at HBS, and wanted to found a company with a social impact angle. This touched on our personal experiences so we decided to work together on it.”

Raghavan explained that most small to mid-sized energy intensive businesses do not understand where their energy expenditure comes from and how they can optimize. They also lack the means or time to look to external consultants or enterprise software.

Nirmaan offers a turnkey energy management solution for small to mid-sized energy-intensive businesses (e.g. food processing and manufacturing), which solves three pain points: visibility, optimization, and battery storage

“We install sensors in the factory; we source the central sensors, install it, collect granular level data. The second part is building the software tool which creates the dashboard where our customer can now see Machine A is doing this, Machine B needs to be turned off at this time. Using AI algorithms, which is our product called Optima AI, we provide tangible, tactical ideas on how you can improve your energy efficiency. And finally, the battery storage component: we’re sourcing and installing battery storage infrastructure for them, which would link back to the AI system. And we have built out a calculator to optimize the custom size of the battery that would give them the highest ROI.”

The hardware components thereby feed into the software component, which is an operating system for all things energy in a factory.

A snapshot of the Optima AI interface.

Nirmaan is among a small handful of players in this space. 

“At the enterprise level, you have Siemens, GE, Schneider Electric,” Raghavan explained. “Then you have individual consultants, who don’t really provide products, and startups like us. Most other startups are focused on the battery aspect of it, but not really building out this operating system. And the reason is people think this is a small market.”

It’s not though, as the team at Nirmaan found. Nirmaan’s market sizing estimates hover around $240 billion total addressable market (TAM, the total market), $60 billion serviceable addressable market (SAM, the share of the market the company can serve), and $20 billion serviceable obtainable market (SOM, or the share of the SAM that the company can reasonably expect to capture).   

“The $20 billion is just food, manufacturing, and industries,” Raghavan noted. “99% of all industrial manufacturing companies in the US are small and medium businesses. 51% of them face this problem of electricity being one of the highest cost items. So it’s a very, very critical problem for them, and that’s the market we’re going after.”

One of Nirmaan’s pilot customers is CommonWealth Kitchen in Boston, a non-profit food-business incubator. Raghavan shared that finding organizations to partner with in the pilot stage took effort and “a lot of cold outreach.”

“Over the last month and a half, I have just walked into more than 50 factories and then asked them if electricity is a problem,” he said. “If it’s not, then we would walk out. If it is, then we would talk to them, ask them what their problem is, really try to understand it, and if we think that there’s a good fit, then we propose a pilot project.”

Most of the factories Nirmaan is targeting currently are smaller, old-school factories, not large enterprises. 

The long-term goal for Nirmaan is to expand to rural India to finally provide a solution to the problem the co-founders grew up witnessing.

“We’re physically here in Boston at HBS, so over the next two months, we’re piloting here to prove our technical viability and business viability,” Raghavan said. “Over winter break, me and my co-founder are going to spend time in India and visit these factories, textile mills, steel mills, which are the backbone of society and the economy broadly, and take it over there.”

The team anticipates that one of the major challenges they will face is getting Indian customers to believe in a fledgling startup. The US pilots, Raghavan hopes, will help to prove Nirmaan’s credibility. 

“Another challenge is working with the government, especially if we are scaling and we need large spaces or are integrating with a grid,” he added. “And the third part of it is definitely running a business: sourcing batteries from different places and making sure we get things on time. How does the operations side look when you have 100 customers across India?”

The team at Nirmaan has also seen a “huge policy push” in the US and India, with the Inflation Reduction Act and incentivization of cleantech startups in India. Solar and battery storage technology has also become much cheaper. The problem also isn’t going away anytime soon, as electricity prices are forecasted to increase 10% year over year, which means Nirmaan sees little threat to its addressable market. 

Raghavan’s message to readers is to join them if interested in working on energy efficiency in the manufacturing space.

“We’re always looking for people to join the team,” he said. “And we’re looking for more pilots. So if you think electricity is a problem in your factory, we would love to help you. In the long-term, we want to be the operating system for all things energy. Our data will be one of our biggest assets and will help us determine what good manufacturing looks like. We might even be able to create microgrids for factories in the future.”