The new Norwegian Climate Investment Fund has announced its first investment in an Indian transmission project, being developed by ReNew Power. The fund will invest alongside KLP, Norway’s largest pension company.
The Climate Investment Fund, managed by Norfund, has been operational since May 2022. It aims to help in reducing carbon emissions by investing in renewable energy in developing countries with significant emissions from coal power and other fossil fuels.
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 109 million kroner (US$11 million) for a 49% stake in ReNew’s transmission project in the Koppal district of southern India, with ambitions for further joint investments. ReNew Power is listed on the Nasdaq.
“Through this investment we are contributing to the connection of 2.5 gigawatts of planned renewable power in the south being connected to the national grid," says Bjørnar Baugerud, Norfund’s vice-president for clean energy.
To meet the growth in electricity demand over the next 20 years, India will need to add a power system the size of the European Union, according to the International Energy Agency. 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 farms.
“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," says Aage Schaanning, KMLP’s chief financial officer. "We expect the project to both generate attractive returns and have a strong climate impact.”
The project will consist of a 5 x 500 MVA 400/220 kV substation at Koppal with 400 kV D/C transmission line from the Koppal substation to the Narendra New substation, and a 400 kV GIS Extension at Narendra New in Karnataka (Koppal Project). Commercial operations are expected to start in 2024.
Since being set up last year, the Climate Investment Fund has already made two investments in India – in a large-scale solar park with Enel, and in Fourth Partner Energy, India’s leading developer of distributed solar energy solutions.
The fund received 1 billion kroner in the state budget for 2022, matched by an equal sum from Norfund’s capital. Norway’s parliament has approved another 1 billion kroner for 2023. The plan is for the fund to reach 10 billion kroner within five years.
As of November 2022, ReNew had a gross total portfolio of 13.4GW of renewable energy projects across India, including commissioned and committed projects.