Renewable Energy

Norfund invests in various renewable energy sources, including solar, wind, hydropower, biomass, and geothermal energy, ranging from large-scale grid-connected plants to smaller distributed generation projects and off-grid solutions. Additionally, Norfund invests in enabling technologies like energy storage and transmission, which have significant climate impacts.

Investing in renewable energy generation and distribution enables job creation, economic growth, improves living standards and mitigates climate change. Norfund made a number of new investments in renewables in 2023. Renewable energy capacity in the world is fast expanding. However, lack of financing for emerging and developing economies is the key obstacle hindering a tripling of capacity by 2030 in line with the COP28 agreement.

Key achievements in 2023

1,375

MNOK

committed

557

new capacity financed, 100% renewable

420,000

new households gained access to electricity

Access to reliable energy is essential for development. In particular, electricity underpins much of modern economic development. Without access to reliable power supply, businesses and public sector services struggle to maintain operations. Furthermore, household energy use is closely linked to living standards and welfare. Enabling greater access to energy thus plays an instrumental role in both business development and living standard improvements.

The need for energy is growing while climate change is becoming increasingly evident. Meeting the growing energy needs through conventional thermal power supply is simply no longer an option given the acuteness of the climate crisis. We must transition the energy sector in all countries to attain a renewable and carbon free future. The opportunity to do so is present – many developing countries have abundant renewable resources and have the possibility to leapfrog directly to renewable technologies that are now technically and commercially viable.

Developing countries’ energy needs are surging due to economic growth. Many of the countries where Norfund is invested are struggling to meet this increasing demand through renewable energy while phasing out fossil fuels. For this to be achieved, and for climate change to be mitigated simultaneously, the International Energy Agency states these countries need to increase renewable energy investments sevenfold. At the same time many countries are facing challenging macroeconomic circumstances, such as inflation shocks and currency devaluation yielding high investment risks. Investors such as Norfund play a crucial role in supporting the power sector’s transition to low-carbon solutions amidst these challenges.

Despite these difficulties, both governments and consumers in many countries are pushing for renewable energy solutions. This contributes to fostering new business models where companies offer renewable solutions on-site or through the grid. Innovations like low-cost solar panels, new battery technologies, and digital payment systems are making rural electrification more accessible. Solar home systems and mini-grid solutions are also becoming more affordable and popular, requiring companies to secure more working capital for growth.

Norfund’s energy strategy targets three areas:

1. Grid-connected, large scale power plants and transmission
2. Smaller scale power plants supplying energy directly to commercial and industrial consumers
3. Off-grid power supply

Integrating large-scale renewables into the grid involves managing intermittency and increasing grid capacity to link areas rich in renewable energy sources with areas that have high demand for such energy. Thus, Norfund’s energy strategy includes investing in both stand-alone storage facilities and grid enhancements.

Consistent with our overarching strategy, we primarily offer equity, the most scarce and risk-prone capital form, investing directly in companies alongside other investors and partners. Our debt investments focus on the off-grid sector, supporting their working capital needs.

Our approach has fostered platform companies and strategic partnerships with key players like Globeleq, Scatec, and Enel Green Power, and supported local entities such as H1 and Pele in South Africa, and Fourth Partner Energy Ltd and SAEL in India. We’ve also financed players that are enhancing the distributed and off-grid energy sector in Africa.

Looking forward, Norfund aims to expand its renewables portfolio in target markets, leveraging and broadening its investment platforms and partnerships, and engaging with new sponsors.

Strategic ambitions

Norfund has defined the following ambitions for the strategy period 2023-2026:

6.5 million new households provided with access to electricity
6.5 GW new renewable capacity financed

Investments and results in 2023

By year end, Renewable Energy accounted for 31.6% of our total portfolio with a total of 41 investments.

1,375

MNOK

committed in 2023

10,280

MNOK

committed in total RE portfolio

Investments per region

Investments per region in 2023

1,375

Total portfolio per region

10,286

Highlights of 2023

new investee companies

follow-on investments

Copperbelt Energy Corporation

Norfund teamed up with KLP and Affirma to acquire a 35% stake in this company. CEC is a supplier of bulk power to mines and large users in the Copperbelt area of Zambia and into the Katanga province of DRC. They own transmission infrastructure in the region, including a stake in the only interconnector between Zambia and DRC, and have recently been investing in renewables.

Sun King

Sun King (Greenlight Planet) is an off-grid solar energy company that designs, distributes, installs and finances solar energy solutions for African and Asian households and businesses who cannot access, rely on or afford traditional electric grid connections. Norfund has participated in a Kenyan Shilling-denominated 130 million USD receivables securitization transaction. The syndicated debt transaction leverages Sun King’s existing and future Kenyan customers’ payments for solar products to raise funding for further growth and expansion of Sun King Kenya.