Norway’s Climate Investment Fund and the country’s biggest pension company, KLP, are set to invest in a 420-megawatt solar power project being developed in Rajasthan, India.
The two parties will invest around 2.8 billion Indian rupees (roughly $35 million) for a 49% stake in the Thar Surya 1 project, which is being constructed by Italian firm Enel Green Power.
According to an announcement from the Norwegian Embassy in India, the Climate Investment Fund is slated to allocate 10 billion Norwegian Krone (approximately $1 billion) to projects over the next five years.
The embassy also described India, which is on track to become the planet’s most populous country next year, as a “priority market.”
That comes as Norway’s development finance institution, Norfund — which manages the Climate Investment Fund — and Enel Green Power have established an India-focused strategic investment partnership.
“This is the first investment we are making with Enel, and together we have great ambitions to contribute with similar investments in India in the years to come,” Tellef Thorleifsson, CEO of Norfund, said in a statement issued Monday.
While it is investing in renewable energy projects, Norway’s oil and gas reserves make it a major exporter of fossil fuels.
“In recent years, Norway has supplied between 20 and 25 per cent of the EU and United Kingdom gas demand,” Norwegian Petroleum says.
“Nearly all oil and gas produced on the Norwegian shelf is exported, and combined, oil and gas exceeds half of the total value of Norwegian exports of goods,” it adds.
India’s Ministry of New and Renewable Energy says that, over the past seven and a half years, the country’s solar capacity has increased from around 2.6 gigawatts to over 46 gigawatts.
India wants its renewable energy capacity — excluding large hydro — to hit 175 GW this year, a challenging target. On June 30, installed renewable energy capacity, excluding large hydro, stood at 114.07 GW, according to a recent statement from India’s minister of state for new and renewable energy.
Despite its renewable energy goals, India remains reliant on fossil fuels. At the end of June, fossil fuels’ share of India’s total installed generation capacity stood at 58.5%, according to the Ministry of Power.
At last year’s COP26 climate change summit, India and China, both among the world’s biggest burners of coal, insisted on a last-minute change of fossil fuel language in the Glasgow Climate Pact — from a “phase out” of coal to a “phase down.” After initial objections, opposing countries ultimately conceded.
During a speech delivered to The Energy and Resources Institute’s World Sustainable Development Summit in Feb. 2022, Indian Prime Minister Narendra Modi said he firmly believed that “environmental sustainability can only be achieved through climate justice.”
“Energy requirements of the people of India are expected to nearly double in the next twenty years,” Modi said. “Denying this energy would be denying life itself to millions. Successful climate actions also need adequate financing.”
He added, “For this, developed countries need to fulfill their commitments on finance and technology transfer.”
The Norwegian interest in India’s renewable energy sector represents the latest example of major organizations and businesses making a play in the country.
Earlier this year, for example, German energy giant RWE and India’s Tata Power announced a collaboration focused on developing offshore wind projects in India.
“India has excellent wind resources, which can help to meet the country’s increasing energy demands,” Sven Utermohlen, RWE Renewables’ CEO for offshore wind, said in a statement.
“If clear regulations and an effective tender scheme are in place, we expect India’s offshore wind industry will gain a real momentum,” he said.
— CNBC’s Sam Meredith contributed to this report.