CDC Group plc, the UK's development finance institution, announced on Friday that it is investing up to US$25 million in Green Infra Ltd., one of India's largest independent renewable power producers. CDC is investing alongside the private equity arm of IDFC Alternatives, India's leading infra-focused investor. Green Infra will use the capital to expand its wind and solar power generation capacity through a combination of organic growth and selective acquisitions.
Green Infra Ltd. was founded by IDFC Private Equity.
India's infrastructure sector - and the power sector in particular - is in urgent need of large-scale investment, acknowledged by the Indian Government's commitment to add 88,000 MW of generating capacity by 2018. Yet the country's rapid growth is outpacing development in traditional power generation, which is expensive and slow to build, and whose CO2 emissions are imposing an additional burden.
According to the Organisation for Economic Development and Cooperation (OECD) and the International Energy Agency (IEA), in 2012 India suffered a peak power deficit of 9%. Over a quarter of the population - more than 300 million people - lack access to electricity, which is critically limiting opportunities for people and businesses. India currently relies on fossil fuels to meet its energy needs, with coal and oil together accounting for two-thirds of primary energy. The Government has identified wind power as a sustainable way to address the deficit, due to its clean credentials, short execution cycle and competitive cost relative to traditional power generation.
Green Infra has grown its generating capacity to 387 MW across 18 assets in six Indian states, with more than 90% of its generation capacity from wind. The CDC investment, part of a US$125 million overall financing round, will allow Green Infra to reach its targeted capacity of 1,000 MW of generating assets by 2016, the equivalent of 5% of India's current wind capacity. The additional capacity will reach almost 1,000,000 people across four Indian states and, as clean energy, will save close to 18 million tonnes of CO2 emissions over the life of the assets.
All of the wind turbines and the majority of other plant equipment will be purchased in India, resulting in additional economic benefits to communities surrounding both the generation and manufacturing plants.
According to Srini Nagarajan, CDC's Regional Director for South Asia:
"Access to reliable electricity has been identified by the World Bank and other experts as a key enabler of development. Our investment will increase access to electricity through renewable power. It will help businesses to develop and grow, create new and better jobs, and improve the lives of millions of people in India."
Shivanand Nimbargi, Green Infra Managing Director and Chief Executive, concurred:
"We are delighted to have CDC's investment, which will help us in contributing to the local community by way of jobs and development, in addition to reducing the carbon footprint and increasing our generation capacity."