BII, Norfund & IndiGrid Enter 300 Mn Partnership To Expand BESS Project In India

BII, Norfund & IndiGrid Enter 300 Mn Partnership To Expand BESS Project In India

IndiGrid, a power sector infrastructure investment trust (InvIT), formed a new platform, EnerGrid in partnership with British International Investment (BII), UK’s development finance institution and impact investor, along with the Norwegian Climate Investment Fund, managed by Norfund. This platform focuses on developing greenfield transmission and standalone Battery Energy Storage System (BESS) projects in India.

The Indian transmission sector is experiencing a significant uptick in its bidding and development momentum on the back of the country’s increasing power demand, changing energy mix and focus on energy transition. According to the latest estimates released by Central Electricity Authority (CEA), India will require an additional 170,000 circuit kilometers of transmission lines and 47 GW of BESS capacity over the next eight years to facilitate evacuation of its growing generation capacity.

Earlier this fiscal, IndiGrid announced the first phase of this partnership, under which BII and Norfund (through KNI India AS, Norfund’s joint venture with KLP, Norway’s largest pension company) invested in three of IndiGrid’s existing greenfield transmission projects. With the EnerGrid platform, IndiGrid, BII and Norfund, alongside KLP through KNI India AS, have committed approximately USD 300 million, with each partner contributing around USD 100 million.

This capital will enable EnerGrid to target projects worth approximately USD 1.2 billion over the next few years. Post commencement of commercial operations, these projects will be fully acquired by IndiGrid at a pre-agreed enterprise value. Through this partnership IndiGrid will lend its pole position in and understanding of the nuanced Indian energy sector. Under this collaboration, BII and Norfund will provide access to capital from global Development Financial Institutions and the Norwegian private pension fund.

Commenting on the partnership, which was signed during COP29, Harsh Shah, Chief Executive Officer, and Whole Time Director of IndiGrid, quoted, “Indian power sector is going through a metamorphosis to facilitate achievement of the country’s net zero goals. The transmission sector is witnessing a bidding pipeline like never before which we are looking to leverage to drive growth. This partnership will ensure that while IndiGrid continues to look for synergistic brownfield projects to acquire, we can also meaningfully create a growth pipeline for us in the under-construction space. We are delighted to have partnered with reputed names like BII and Norfund as they will lend their credibility to the new platform while guiding it in implementation of best-in-class ESG and corporate governance practices.”

Tellef Thorleifsson, Chief Executive Officer (CEO) of Norfund, said, “Norfund recognizes the crucial role that investments in transmission infrastructure play in achieving the Indian government’s ambitious renewable energy targets. Unlocking capital to accelerate the energy transition is a central theme at COP29 in Baku, and we are delighted to announce this new partnership, which exemplifies our commitment to mobilizing the necessary capital.”

Srini Nagarajan, Managing Director (MD) and Head of Asia at British International Investment added, “The launch of EnerGrid further demonstrates how BII is pioneering investment in climate finance to mobilise private capital at scale. Significant investment is required for India to meet its ambitious net zero target, especially in developing the country’s transmission infrastructure and energy storage capacity. This partnership will help to attract more private capital into a critical sector, which will facilitate the growth of renewable energy supply to meet growing energy demand sustainably and accelerate India’s journey towards a greener future.”