UK oil and gas giant bp will invest $70 million in Green Growth Equity Fund, an India-based fund managed by EverSource Capital.
Launched in 2018, GGEF reached a first close on more than $340 million, according to a statement, with commitments from its two anchor investors: the National Investment and Infrastructure Fund, a vehicle backed by the Indian government; and the UK government-backed development finance institution CDC Group.
“This investment will aid GGEF in rapidly scaling up no carbon and low carbon solutions that are commercially viable, which will help India achieve its climate goals,” EverSource Capital said in the statement. “It also provides a platform for bp to co-invest in a variety of green projects in India alongside GGEF,” adding that the British company will also have representation on the fund’s advisory board.
The fund focuses on decarbonisation of the energy sector and resource efficiency investing in renewables, energy efficiency, energy storage, e-mobility, resource conservation and related value chains.
GGEF has made four investments to date. The first is Ayana Renewable Power, a platform launched by CDC Group in 2018, in which Eversource Capital, NIIF and CDC invested a total of $330 million last year.
Ayana aims to build utility-scale renewable energy capacity of 6GW across India in five years. It has now 1.2GW of operational and under development capacity, EverSource Capital chief executive Dhanpal Jhaveri told Infrastructure Investor.
The other assets in GGEF’s portfolio are distributed renewables platform Radiance Renewables, which is targeting 1.5GW in solar, wind and storage projects in three to five years; electric mobility operator GreenCell mobility; and waste management platform Everenviro.
Asked what the fund’s return rate was, Jhaveri said: “Our current focus is on raising as well as deploying the fund. It is too early in the fund cycle to assess the returns right now.”
Founded in 2018, EverSource Capital is a 50-50 joint venture between Singapore-based investment firm Everstone Group and UK-based renewables developer Lightsource BP. GGEF is the first investment NIIF has made through its fund-of-funds strategy.
India is aiming to install 175GW of renewable power capacity by 2022 and 450GW by 2030. According to the country’s Ministry of New and Renewable Energy’s latest annual report, the nation had 89.5GW of installed renewables capacity as at the end of 2019.
India is on track to meet its 2˚C compatible rated Paris Agreement climate action targets, according to the Climate Action Tracker, but falls short of the lower 1.5°C target. While the country’s investment in renewables outpaces that channelled into fossil fuels, “a significant caveat on the outlook for India is the ongoing expansion of coal”, according to CAT.
The country currently has more than 200GW of coal-fired capacity in operation, and another 90GW could be added if the country moves forward with its National Electricity Plan released in 2018.
“This is an important consideration, as India’s CO2 emissions rose by 4.8 percent in 2018, largely driven by emissions from coal power plants,” CAT states on its website.