PremiumThis investment will reduce bottlenecks in the Indian transmission system and open the way for new renewable power generation to produce electricity to meet rising Indian demand
NEW DELHI: Norway’s Climate Investment Fund, managed by Norfund, together with Norwegian pension fund KLP, will invest ₹900 million in a transmission project in Karnataka being developed by ReNew Power. With the investment, both the funds will together pick up 49% stake in the project.
“In partnership with ReNew Power, one of the largest renewable energy independent power producers (IPPs) in India and globally, Norfund and KLP will invest around ₹900 million for 49% ownership stake in ReNew’s transmission project in the Koppal district of southern India, with ambitions for further joint investments," said a statement from the Norwegian Embassy in Delhi.
Citing the International Energy Agency (IEA), the statement said that to meet growth in electricity demand over the next twenty years, India will need to add a power system of the size of the European Union (EU). Scaling up solar and wind energy requires significant investments in transmission lines to stabilize the grid and transport energy from the areas most suitable for solar and wind parks, it said.
“India succeeding in its green transition is key for the world to succeed in combating global warming. I am glad Norway can contribute to enable expansion of renewables in India through investing in transmission lines," says Norwegian Ambassador Hans Jacob Frydenlund.
Sumant Sinha, chairman and CEO of ReNew Power, said, “Investment in the transmission sector provides synergies with our core RE portfolio and demonstrates our success in capital recycling. As a leader in India’s energy transition, we are excited to partner with Norfund and KLP to support India’s green energy transition and look forward to strengthening this partnership in the future.“
Bjornar Baugerud, vice president, Clean Energy in Norfund, noted that through the investment, Norfund is contributing to the connection of 2.5 GW of planned renewable power in the south being connected to the national grid. “We are pleased to make Norfund’s and the Climate Investment Fund’s first investment in the sector, and we look forward to strengthening our partnership with Renew," says Baugerud added.
The project will comprise a 5 x 500 MVA 400/220 kV sub-station at Koppal with 400 kV D/C quad moose transmission line from Koppal substation to Narendra New substation and 400 kV GIS Extn at Narendra New in Karnataka (Koppal Project). Commercial operations are expected to start in the first quarter of FY24.
“This investment will reduce bottlenecks in the Indian transmission system and open the way for new renewable power generation to produce electricity to meet rising Indian demand. We expect the project to both generate attractive returns and have a strong climate impact," says Aage Schaanning, Chief Financial Officer at KLP.
This is the third investment of the climate investment fund in India
Operational since May, Norway’s new Climate Investment Fund, managed by Norfund, will reduce and avoid emissions by investing in renewable energy in developing countries with significant emissions from coal power and other fossil fuels, the statement said, adding that the fund has already made two previous investments in India, in a large-scale solar park with Enel and in Fourth Partner Energy, a developer of distributed solar energy solutions.
The new Norwegian Climate Investment Fund received 1 billion NOK (Norwegian Krone) in the state budget for 2022, matched by an equal sum from Norfund’s capital, and the parliament has now approved another 1 billion NOK for 2023. The plan is for the fund to reach 10 billion NOK within five years.
“Norfund has identified potential investments for over 8 billion NOK. Faced with the total needs, our contributions are moderate, but there are great possibilities for scaling up," Baugerud said.
ReNew develops, builds, owns, and operates utility-scale wind energy, solar energy, and hydro projects. As of November 1, 2022, ReNew had a gross total portfolio of 13.4 GW of renewable energy projects across India, including commissioned and committed projects.
According to IEA, yearly investments in renewable energy in developing countries need to increase sevenfold from the present $150 billion to over $1 trillion by 2030, to limit the rise in temperatures to as close as possible to 1.5 degrees Celsius above pre-industrial times. At the same time a new report from Bloomberg NEF shows investments in renewable energy in these markets have fallen to the lowest level since 2016.