Initiated in July 2020, Norfund and Enel Green Power entered into a joint investment agreement focused on renewable energy projects in India. The partnership’s maiden project, the impressive 420 MW Thar solar plant, was unveiled in August 2022. This latest venture entails a 168 MW wind project located in Gujarat. Similar to the Thar project, Enel Green Power secured the rights to sell power through a government auction, securing a long-term power purchase agreement spanning 25 years.
Images-: Norfund
Norway’s Climate Investment Fund, managed by Norfund, and KLP, the largest pension company in the country, have joined forces to support a 168 MW wind power project developed by Enel Green Power in India. Enel Green Power, established in 2008 as part of the Enel Group, is dedicated to the development and management of renewable energy projects worldwide, with a staggering 59 GW of installed capacity across Europe, Asia, Africa, and the Americas. In a collaborative effort initiated in July 2020, Norfund and Enel Green Power entered into a joint investment agreement focused on renewable energy projects in India. The partnership’s maiden project, the impressive 420 MW Thar solar plant, was unveiled in August 2022.
This latest venture entails a 168 MW wind project located in Gujarat. Similar to the Thar project, Enel Green Power secured the rights to sell power through a government auction, securing a long-term power purchase agreement spanning 25 years. Through the investment partnership known as KNI India, Norfund has engaged KLP, Norway’s primary pension company, pooling their resources to provide approximately NOK 317 million (equivalent to INR 2.4 billion) in equity capital and loan guarantees of up to NOK 530 million (equivalent to INR 4 billion) to facilitate the project’s construction. (KNI India is jointly owned by the Climate Investment Fund, holding a 51% stake, and KLP, holding the remaining 49%.) The wind power plant, already operational, is projected to generate around 700 GWh per year. Considering India’s current heavy reliance on coal for energy, this undertaking is estimated to offset approximately 573,000 tons of CO2 emissions annually.
This investment represents the fourth initiative undertaken by the Climate Investment Fund in India, a nation with a significant demand for energy sector growth. To meet the anticipated surge in electricity demand over the next two decades, India will need to add a power system equivalent to the entire current production of the European Union, according to the International Energy Agency (IEA). In 2022, India experienced the most rapid increase in power output in 33 years, with coal-fired power production soaring by a staggering 12.4%. Consequently, power generation emissions rose by almost one-sixth, reaching 1.15 billion tons, according to an analysis by Reuters.
Tellef Thorleifsson, CEO of Norfund, emphasizes the crucial nature of mobilizing additional capital for renewable investments in India to support the country’s growth while countering the recent trend of investors redirecting funds away from emerging markets like India.
This latest investment represents a significant portion of the initial year’s commitments under the new Climate Investment Fund, which the government plans to allocate a total of NOK 10 billion over the next five years (NOK 1 billion from Norfund’s capital and an additional NOK 1 billion from the state budget annually).
According to estimations presented in the fund’s recent annual report, released last year, the first-year commitments are expected to finance projects resulting in a total estimated reduction of 6.2 million tonnes of CO2e emissions per year. This figure is equivalent to 13% of Norway’s annual emissions. The project announced on Monday marks the third investment in which KLP has participated as a co-investor within the Climate Investment Fund framework.
Sverre Thornes, CEO of KLP, highlights the company’s objective of increasing climate-friendly investments by a minimum of NOK six billion each year. He expresses satisfaction with the project’s potential to expand renewable energy production while simultaneously providing positive returns to KLP’s stakeholders.
