CIP seeks quality over quantity in Indian renewables

Associate partner Peter Sjøntoft reflects on Copenhagen Infrastructure Partners strategy for India after reaching a major milestone in its partnership with developer Viviid Renewables.

Copenhagen Infrastructure Partners is an active developer of offshore wind on the global stage, but the Danish manager has had to bide its time when it comes to offshore in India.

The Ministry of New and Renewable Energy called for expressions of interest on India’s first offshore wind project in April 2018, but almost six years later it is yet to take shape.

“So far, it’s moved a little bit slower than most people had hoped for,” CIP associate partner Peter Sjøntoft said.

“We’ll continue to follow it and see what happens.”

In the meantime, CIP is throwing itself into other renewable energy opportunities the country has to offer.

So far, that has mainly been in solar, through the firm’s 2021 partnership with AmpIn Energy Transition (formerly Amp Energy India).

However, wind is coming more to the fore through CIP’s 2023 partnership with Viviid Renewables.

“There’ll be a disproportionate amount of wind but there’s also likely to be some solar,” Sjøntoft said.

That will be onshore wind for the time being, with CIP recently taking a final investment decision on the partnership’s first project, a 300MW wind farm in the state of Karnataka.

While construction on this wind farm is due for completion by the end of 2025, the partnership aims to develop at least 1.8GW of renewable energy projects in India – meaning the equivalent of five more wind farms could be in the pipeline.

Still, Sjøntoft said CIP’s approach is quality over quantity.

“It’s not about building a large number of projects for the sake of building a large number of projects. It’s about finding high-quality investment opportunities that have an attractive return profile in a risk-mitigated manner.”

CIP’s approach is also to form enduring partnerships with developers like Viviid that span multiple projects.

“We work with a limited number of high-quality contractors, reducing the number of interfaces between different contractors in a project’s execution.”

India as a growth market

Since CIP entered the Indian market in 2021, the country has become a core market for its Growth Markets Fund strategy.

New Markets Fund I, also known as Growth Markets Fund I, held a final close on $1 billion in 2019.

Although its investment period is over, Sjøntoft said as capital becomes available there are some ring-fenced projects CIP could look at.

“As cash comes back, there is an opportunity to maybe deploy some of that and recycle that, but other than that, it’s not expected to engage in new development.”

GMF II launched during COP28 with a target of $3 billion and a slightly refined geographical focus.

“If you look at the universe out there that’s not covered by our flagship funds, China is a separate story and it’s one that GMF II will not pursue.

“Out of the rest of the world, India is by far the one that installs the most capacity year after year.

“It would be very weird if it was not something we were taking a very hard look at. And it’s a market where we’ve had good success, good traction and we’ve found really good investment opportunities.”

GMF II targets high-growth, middle-income markets in Asia and EMEA, as well as Latin America, although Sjøntoft said of the latter: “There is certainly scale but you don’t have that underlying energy demand growth in the same way that you do in India and Southeast Asia.”

India’s ‘peculiarities’

Still, investment in any country comes with its challenges.

Sjøntoft said India’s “peculiarities” were often linked to its governance structure.

“In certain aspects of renewable energy projects, you have a state level of regulation and complexity, and a national level of regulation and complexity.”

Luckily, India had a lot of expertise to deal with such complications.

“Something that makes it quite approachable is that there is a wide, deep bench of highly qualified industry professionals in-country, who have delivered projects for several decades, who understand all aspects of project development and execution.

“There are many other markets we look at that have that to a lesser extent.”

CIP will begin to deploy capital from GMF II while fundraising continues.

“It will do similar projects [to NMF I]: renewable energy, solar, wind, storage and potentially also niche technologies if attractive opportunities come up.”

Although GMF II’s $3 billion target is three times NMF I’s final close figure, Sjøntoft is confident of achieving that.

“There is a seed portfolio of very significant project opportunities that makes me very comfortable that committing and deploying $3 billion – while an interesting and exciting task – is not something that we’re particularly worried about.”