Notchwatt

Phase-by-phase energy retrofits for small factories, financed through ADEETIE

Climate Tech IoT SMEs

TL;DR Notchwatt helps small factory owners in energy-heavy clusters upgrade their sheds and utilities in stages, starting with the cheapest, fastest-paying fix. It meters the unit, writes the project report, packages the loan for the government's interest subsidy, and proves the savings afterwards. Owners pay a fee per phase, partly from the savings.

The problem

Small factories in sectors like forging, foundry, ceramics and textiles run old motors, compressors, furnaces and leaky sheds. Owners know the energy bills hurt but rarely have the time, data or bank file to fix everything in one go. A full retrofit is too big a loan for a micro unit, and a vendor selling one machine isn't a plan.

The government has now put money on the table. Its own projection is that the right technologies could cut MSME energy use by 30–50%[1], though that's a ministerial claim, not a measured result.

So who turns a scheme into signed projects? Someone still has to do the audits, reports and loan papers unit by unit, and right now that someone is mostly missing.

The idea

Notchwatt treats a factory as a sequence of small projects. In week one, clamp-on meters go on the main loads for two weeks. The team then writes a phased plan - phase one is usually compressed-air leaks, motor and pump swaps and lighting, which pay back fast. Phase two is process heat, insulation and the building shell. Phase three is rooftop solar and heat recovery.

Each phase is written up as a detailed project report in the format lenders and the scheme expect, so the owner can borrow for it. Notchwatt doesn't install equipment itself. It hands the specification to vetted local vendors and checks the work. After commissioning, the meters stay on and Notchwatt sends a monthly savings statement, which the owner needs to keep the interest subsidy and which builds the case for the next phase.

The seed talked about buildings broadly. I picked factory buildings because that's where a funded scheme now pays for the audit and the loan.

Who pays

The factory owner pays a small fee for metering and the phased plan, a fee per project report, and a monthly fee for measuring savings. Part of the audit cost may be covered by the scheme's ₹50 Cr audit allocation[1], depending on empanelment. Equipment vendors are a second source of income through referral fees, though that needs care if you want your advice to stay independent.

Why now

In July 2025 the Ministry of Power launched ADEETIE with ₹1,000 Cr, split into ₹875 Cr of interest subvention, ₹50 Cr for energy audits and ₹75 Cr for implementation support[1]. Micro and small units get a 5% interest subsidy and medium units 3%, across 14 sectors and 60 clusters in the first phase, running to FY2027-28[2]. That window is short, so don't dawdle.

Market signal

The scheme is expected to mobilise about ₹9,000 Cr of investment, including ₹6,750 Cr of MSME lending[2]. That's the narrowest defensible figure, because it's money that needs audits, reports and verified savings. No public figure exists for the number of units in the 60 first-phase clusters.

Who's already doing this

BEE funds investment-grade audits, project reports and post-project monitoring under the scheme through its own channels[3]. Energy-savings firms sell savings to larger commercial buildings[4]. Equipment makers offer free audits that, surprise surprise, lead to their own products. The gap for Notchwatt is a vendor-neutral firm that stays with one small factory across several phases and keeps the savings proof the subsidy depends on.

How hard is it?

Difficulty Moderate (44/100)
Starting capital ₹45–85 L
Time to launch 4–6 months

Engineering is the easy part. The hard parts are getting empanelled or partnering with an empanelled agency, earning trust in tight-knit clusters, and keeping meters running in dusty, hot sheds for years. Owners in a cluster talk to each other, so one bad project can close a whole town to you.

Licences and approvals

No licence is needed to plan retrofits, but scheme rules and auditor credentials matter before you sell.

  • ADEETIE scheme terms from the Bureau of Energy Efficiency, checked before you sell. Audits and monitoring run through its portal, so confirm empanelment rules and eligible sectors[3].
  • Interest subvention conditions, 5% for micro and small and 3% for medium units, confirmed in the official guidelines before you promise a client the subsidy[1][2].
  • BEE-certified energy auditor under the Energy Conservation Act 2001, on any audit a lender or the scheme relies on.
  • ECSBC 2024 from BEE, only if you extend to commercial buildings[5].
  • Company registration, GST and DPDP Act compliance as for any service firm.

Building this outside India? The categories above usually have a local equivalent, so check with your own regulator.

How AI can power this business

  • Meter data reading. A model reads two weeks of clamp-on meter logs and flags idle loads, air leaks and oversized motors, so the engineer starts with a shortlist.
  • Project report drafting. It turns audit findings into the format lenders and the scheme expect, which cuts the time from audit to loan file.
  • Savings statements. Monthly reports compare metered use against the baseline automatically, adjusted for production, so the owner keeps proof for the subsidy.
  • Vendor spec checks. It compares vendor quotes against the specification and spots missing items before the work starts.

Don't trust AI to certify savings or approve a loan file. A certified auditor has to sign those, and a bad baseline will mislead everyone.

Want to work out the AI layer for Notchwatt? Talk to Yash →

Biggest risks

  • Scheme rules change. Empanelment, fees or deadlines may shut out a new firm.
  • Savings fall short. If metered savings miss the plan, owners lose the subsidy and blame you.
  • Owners stop after phase one. The business depends on later phases that may never be financed.

Our take

I like this for an energy engineer who knows one industrial cluster and has patience with small owners. If you're hoping to scale nationally in year one then it's the wrong idea. Prove two things first - that 10 units in one cluster will pay for a phased plan, and that two loans get sanctioned under the scheme.

Questions founders ask

Plan for roughly ₹45–85 L, mostly for meters, a small engineering team and the first months of selling into clusters.

Do I need a licence to start an energy audit business in India?

No sector licence, but audits that lenders or the ADEETIE scheme rely on need a BEE-certified energy auditor, and you should check the scheme's empanelment rules.

Can I start a factory retrofit business in another country?

Yes, if small factories there have a subsidy or loan scheme for efficiency. The financing route is what makes this model work, so find that first.

Download the kit

The free Notchwatt validation kit has the line-by-line capital breakdown, the effort scoring, the scheme and rules checklist, a 14-day validation sprint with pass/fail targets, a 90-day launch plan, 10 interview questions for factory owners and lenders, and 5 assumptions to test. Download the kit →

Talk to Yash

Thinking about building Notchwatt or something close to it? The make-or-break work is getting into the scheme's audit channel and winning trust in one cluster, and I'm happy to help you map that out. If you need a hand, you know where to find me. Talk to Yash →

Sources

  1. The Week (PTI), "Manohar Lal Khattar launches ADEETIE scheme to accelerate industrial energy efficiency", 2025-07-15. https://www.theweek.in/wire-updates/business/2025/07/15/nrg8-hr-adeetie-scheme.html
  2. Energetica India, "Ministry of Power launches INR 1000 Cr ADEETIE scheme to boost energy efficiency in MSME sector", 2025-07-17. https://www.energetica-india.net/news/ministry-of-power-launches-inr-1000-cr-adeetie-scheme-to-boost-energy-efficiency-in-msme-sector
  3. Bureau of Energy Efficiency, "ADEETIE scheme", accessed 2026-10-21. https://beeindia.gov.in/adeetie.php
  4. Smart Joules, official site, accessed 2026-10-21. http://www.smartjoules.co.in/
  5. Bureau of Energy Efficiency, "Energy Conservation Building Code", accessed 2026-10-21. https://beeindia.gov.in/en/programmes/energy-conservation-building-code-ecbc

For illustration only. Names are fictional and ideas hypothetical; sourced facts are real but may be out of date. Nothing here is legal, financial or professional advice, and Yash Khatri is not personally liable for any use of it. Read the full disclaimer.

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