Global pension funds look for local solar power deals
Some of the world’s biggest pension funds, seeking longterm returns on green investments, are scouting for deals in India’s solar power sector, where Prime Minister Narendra Modi is targeting a $100-billion in investment in the next five years.
Power demand in Asia’s third-largest economy is set to surge as the economy grows and more people move into cities. India estimates peak electricity demand will more than quadruple in the next two decades to 690 gigawatt (GW), which would require a rapid growth in generation and transmission capacity.
That potential, helped by cheaper solar material costs and the government’s efforts to curb pollution, is drawing global investors, including Canada’s top pension fund managers — Canada Pension Plan Investment Board (CPPIB), Caisse de dépôt et placement du Québec (CDPQ) and Ontario Teacher’s Pension Plan (OTPP).
Investors’ focus is primarily on solar power generation, funding large-scale solar parks. CDPQ, which has C$270.7 billion ($199 billion) in net assets, says it plans to invest in India’s solar sector with Azure Power, a New Yorklisted company with about 1 GW of solar capacity under various stages of development.
“We plan to do more with them. Our approach is really to pick the right partner and then build a platform that can be sustained over several years,” said Anita George, CDPQ’s South Asia head, adding she wouldn’t rule out investing in other solar ventures in future.
Other international investors have already entered India’s renewable energy sector, such as Dutch fund manager APG, Canada’s Brookfield Asset Management, the private equity arms of Goldman Sachs, JP Morgan and Morgan Stanley, and European utilities EDF, Engie and Enel.
APG Asset Management, which last year agreed to jointly invest $132 million with India’s Piramal Enterprises into solar power, is looking for more deals.
“We expect to be able to announce another investment in the Indian renewable energy sector in the coming months,” said Hans-Martin Aerts, APG’s infrastructure head for Asia Pacific.