Norway invests in India’s solar energy project, considering it a priority market

India is aiming to increase its renewable energy capacity, but achieving it is a big challenge.

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Norway’s Climate Investment Fund and the country’s largest pension company, KLP, are set to invest in a 420 megawatt solar power project under development in Rajasthan, India.

The two sides will invest about 2.8 billion Indian rupees (about 35 million USD) for a 49% stake in the Thar Surya 1 project, built by Italian company Enel Green Power.

According to an announcement from the Norwegian Embassy in India, the Climate Investment Fund is expected to allocate 10 billion Norwegian Krone ($1 billion) to projects over the next five years.

The embassy also describes India, which is on the verge of becoming a planet most populous country next yearas a “priority market”.

It comes as Norway’s development finance institution Norfund – which manages the Climate Investment Fund – and Enel Green Power have established a strategic investment partnership with a focus on India.

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“This is the first investment we have made with Enel and together we have the ambition to make a big contribution with similar investments in India in the coming years,” said Tellef Thorleifsson, CEO of the company. Norfund, said in a statement 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 percent of the EU and UK gas needs,” Norwegian Petroleum said.

“Nearly all the oil and gas produced on the Norwegian shelf is exported, and combined, oil and gas exceed half the value of total Norwegian exports.”

India’s Goals

Over the past seven and a half years, the country’s solar capacity has grown from about 2.6 gigawatts to more than 46 gigawatts, India’s Ministry of New and Renewable Energy said.

India wants its renewable energy capacity – excluding large hydro – to reach 175 GW this year, a challenging target. As of June 30, installed renewable energy capacity, excluding large hydropower, stood at 114.07 GW, according to a recent statement by India’s Minister of Foreign Affairs on New and Renewable Energy create.

Despite its renewable energy goals, India remains dependent on fossil fuels. At the end of June, the share of fossil fuels in India’s total installed generation capacity stood at 58.5%, according to the Ministry of Electricity.

At last year’s COP26 climate change summit, India and China, both among the world’s largest coal-burners, emphasis on last-minute fossil fuel language change in the Glasgow Climate Compact – from “phase out” of coal to “reduced phase”. After initial protests, the opposing countries finally gave in.

In his speech at the Institute of Energy and Resources’ World Summit on Sustainable Development in February 2022, Indian Prime Minister Narendra Modi said he firmly believes that “environmental sustainability can only be achieved through climate justice.”

“The energy demand of the Indian people is expected to nearly double in the next twenty years,” Modi said. “Rejecting this energy would be denying the lives of millions of people. Successful climate actions also require commensurate funding.”

For this, developed countries need to fulfill their commitments on financing and technology transfer, he added.

European interest rates

Norway’s interest in India’s renewable energy sector is the latest example of large organizations and businesses playing a game in the country.

Earlier this year, for example, the German energy giant RWE and of India Tata Power announced a partnership focused on developing offshore wind projects in India.

Sven Utermohlen, RWE Renewables Managing Director for offshore wind, said: “India has excellent wind resources that can help meet the country’s growing energy needs.

“If clear regulations and an effective procurement scheme are in place, we expect India’s offshore wind industry to gain real momentum,” he said.

– CNBC’s Sam Meredith contributed to this report.

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