Copenhagen Infrastructure Partners’ Growth Market Fund invests in renewable energy infrastructure in fast-growing major new economies, particularly in Asia and Latin America. A project in India shows the challenges and rewards.
Undertaking an inaugural investment in any country always comes with its challenges. Doing so during some of the most severe periods of the COVID-19 pandemic only multiplies the potential challenges. However, on the Unicus portfolio, it proved to be a challenge the team were able to overcome.
In any negotiation, getting to know your counterparts and spending time together outside the meeting room to form commercial and personal bonds is essential. But, of course, this was impossible during the pandemic, as Copenhagen Infrastructure Partners (CIP) was setting up Unicus, a 1.7 GW solar and hybrid joint venture in India - a critical first investment in one of the world’s largest and fastest growing renewable markets and the New Markets Fund’s largest commitment to date.
The team did an amazing job working with our partners on video calls. There are a lot of cultural differences between India and Denmark, but one of our strengths is understanding the people across the table from us - or in this case, the video screen - and being able to build relationships with them nonetheless
The team had to be sensitive and perceptive around what we thought was happening on the other side – have they had a good or a bad day? Are there personal factors we don’t know about or don’t understand? And you have to consider how to manage senior counterparties in more hierarchical societies, where often the organisation’s leader can’t be seen by their team to lose a negotiation. Finally, you also need to consider the sometimes-chaotic nature of videoconferences with 10 or 20 people online with varying levels of connectivity and across different time zones
Unicus, which reached final investment decision in June 2021, is a key investment for Growth Markets Fund, which invests in renewable energy infrastructure targeting fast-growing major new economies, primarily in Asia and Latin America.
The Growth Markets Fund, established in 2019, was a natural next step to broaden CIP’s investment scope to opportunities in middle-in- come countries with a significant need for new renewable energy investments. The fund focuses on greenfield projects, completes development and funds construction with the objective of exiting the investments once plants are operational.
There is a large and growing need for new energy infrastructure outside of North America and Europe, which CIP’s traditional Flagship Funds target. The Growth Market Fund pursues these new growth opportunities by exploiting CIP’s existing industrial skills, networks and de-risking approach to create value for investors – combining some of the industry’s most experienced investors with CIP’s proven ability to design, construct and commission world- class projects.
Emerging markets, like India, are tremendously important in terms of economic growth and addressing the growth in carbon emissions. Populations and societies are demanding more energy, the economies are advancing, and it is
strategically important for us to be where the growth is ultimately going to be
India is the world’s third-largest energy consumer and has committed to reducing emissions intensity by 33-35% by 2030, compared to 2005 levels. Unicus, the first joint venture project with Amp India, was commissioned in March 2022, two more are under construction, and many more are progressing rapidly.
Emerging markets have a different dynamic than more established markets. As typical for emerging markets, Unicus projects are smaller than traditional CIP projects, and the governance and project delivery approach must be scaled to reflect that. Equally, procurement, construction and financing can also vary from what CIP is used to in established markets, so active collaboration is critical.
Things move very quickly in this market, which is a good thing provided that speed does not come at the expense of technical and commercial integrity,” Holst says. “For us, it’s imperative to have a reliable partner like Amp India on board from the outset to deliver projects that fully meet our needs in terms of ESG, procurement and quality
The global renewable energy supply chain is increasingly complex and potentially even more so in India, for example, regarding the supply and pricing of solar panels. Amp India’s expertise and agile approach has helped solve problems and protect returns through a combination of efficient procurement from other suppliers and improving offtake- and financing contracts.
It’s a huge advantage for us to have an excellent partner with experience and a similar mindset. It’s been good to see how we work together to find solutions
Across the world CIP is engaged in green energy and infrastructure projects. Here are a few of them.