Enel Green Power, founded in 2008 within the Enel Group to develop and manage renewable power projects globally, operates over 59 GW of installed renewable capacity in Europe, Asia, Africa and the Americas. In July 2020 Norfund and Enel Green Power entered into a joint investment agreement for renewable energy projects in India. The first project together, the 420 MW Thar solar plant, was announced in August 2022.
This second project is a 168 MW wind project in Gujarat state. As with Thar, Enel Green Power was awarded the rights to sell power under a government auction and has a 25-year power purchase agreement. Via the investment partnership KNI India, Norfund brings along KLP, Norway’s biggest pension company, with joint commitments of ca NOK 317 million (INR 2,4 billion) in equity capital and loan guarantees up to NOK 530 million (INR 4 billion) towards the construction of the project. (The Climate Investment Fund owns 51% and KLP 49% of KNI India).
The plant, which has been put into operation, is expected to produce ca 700 GWh per annum. Given India’s current energy sources, with a considerable proportion coming from coal, the project will avoid ca 573,000 tons CO2 per annum*.
The investment is the fourth made under the Climate Mandate in India, the country with the world’s greatest need for growth in the energy sector. To meet growth in electricity demand over the next twenty years, India will need to add a power system the size of the current EU production, according to the IEA. In 2022, India’s power output grew at the fastest pace in 33 years, and coal-fired power output grew by a staggering 12.4%. That also meant that emissions from power generation rose by nearly a sixth, to 1.15 billion tons, according to a Reuters analysis.
“If India is to be able to finance its growth with renewables, it is crucial that we succeed in mobilizing more capital towards these investments, in a world where investors now seem to be pulling money away from emerging markets like India”, says Tellef Thorleifsson, CEO of Norfund.
India needs USD 233 billion in investment, just to meet its goals for development of wind and solar energy by 2030, according to BloombergNEF.
Climate investments will already avoid equivalent of 13% of Norway’s annual emissions
The latest investment is part of total commitments of NOK 2.14 billion in the first year of the new Climate Investment Fund, that the Government has said will be allocated NOK 10 billion over the next five years (1 billion from Norfund’s capital and 1 billion from the state budget each year).
According to calculations in the new annual report of the fund, that became operational last year, the commitments of this first year will already finance projects with total estimated avoided emissions of 6.2 million tonnes CO2e per year*. That is the equivalent to 13% of Norway’s annual emissions.
The project announced today is the third investment under the Climate Investment Fund with KLP as a co-investor.
“KLP has a goal to increase climate-friendly investments by at least six billion NOK every year. We are satisfied that we with this are increasing the production of renewable energy, while it is providing positive returns to our owners,” says Sverre Thornes, CEO at KLP.
* Avoided emissions have been calculated using the harmonised “Methodological Approach for the Common Default Grid Emission Factor (2022)” and related emission factors.