Enel joins the Indian solar gold rush

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With British fossil fuel giant BP having committed to invest in Indian renewables, another signal the nation’s solar market is ready to attract big foreign investment has arrived with a statement of intent from Italian utility Enel.

Italy’s biggest power company already owns and operates 172 MW of wind generation capacity in Gujarat and Maharashtra and landed its first solar project in the country with a 300 MW slice of the latest round of the national tender program conducted by the Solar Energy Corporation of India (SECI).

With Spanish developer Solarpack having set a new record low price for Indian solar of Rs2.36/kWh in that procurement exercise, Enel was among five overseas-financed developers to lodge successful bids in a 2 GW tender which set a maximum solar tariff of Rs2.38.

The utility, in which the Italian Ministry of Economy and Finance holds a controlling stake, yesterday announced it has signed a long-term agreement with the state-owned Norwegian Investment Fund (Norfund) to develop more renewables capacity in India.

Agreement

Under the terms of the agreement, the Enel Green Power India subsidiary of the power company will develop clean energy projects in which Norfund will have the option of investing in return for an equity share. A press release issued by Enel yesterday to announce the arrangement did not set any capacity targets or specify a timeline for the commitment, however.

“This agreement gives us the opportunity to expand and strengthen our presence in India, after recently scoring our first win in a solar tender in the country,” said Antonio Cammisecra, CEO of the utility’s Enel Green Power division. “By joining forces with an important partner such as Norfund, which shares our commitment towards sustainability and decarbonization, we will leverage on our technical expertise to harness the significant renewable growth potential of India, while contributing to the achievement of the country’s sustainable energy targets.”

Historically-low interest rates set by central banks in Europe and the U.S. have been further depressed by the need to drum up investment to aid the recovery from Covid-19 in many nations. With solar developers from France and Germany among the successful bidders in the recent SECI tender – and two of the three Indian bids backed by U.S. private and U.K. public money – it appears the business case for Indian solar may have reached a level sufficient to unlock big volumes of foreign direct investment as the nation chases an increasingly distant-looking 100 GW of solar generation capacity by 2022.