British International Investment launches £300m platform for renewables in India, as UK calls for ‘fundamental reset’ in approach to development

The UK’s development finance institution launched a £300m platform to boost renewable energy generation in India, as the UK government pledged to “move from donor to investor” for international development last week. 

British International Investment announced it was committing £150m to the North Star platform, with a further £150m raised from Danish global fund manager Copenhagen Infrastructure Partners. It intends to support India’s goal to triple its renewable energy capacity by the end of the decade, which requires filling a US$160bn funding gap.

BII’s investment in North Star is the first commitment made through the £1bn British Climate Partners, an initiative launched in BII’s new strategy to invest in emission reductions in countries that still  rely heavily on coal power, including India and several countries in south east Asia. BII estimates that out of the 80 countries where it makes investments, 55% of emissions from these markets come from four countries – India, Indonesia, the Philippines and Vietnam.

Leslie Maasdorp, CEO of BII, said: “At the launch of our new strategy last month, we said that BII would focus on mobilising private capital to address acute development needs and combat the climate emergency. North Star is the first embodiment of that commitment.” 

He added he expected more private investment to flow into the North Star platform over the next few years.

North Star will invest in energy generation including solar, wind and hybrid renewables (where several forms of renewable energy are combined), as well as energy storage projects, which are expected to avoid about 4m tonnes of carbon emissions each year.

Calls for ‘equal partnerships’

The North Star launch took place during the Global Partnerships Conference, organised by the UK’s Foreign, Commonwealth & Development Office, South Africa, BII and the Children’s Investment Fund Foundation in London last week. Two of the focuses of the conference were about driving more private investment in development, and mobilising local capital in global south countries.

UK foreign secretary Yvette Cooper said substantial shifts were needed to adapt to the current geopolitical landscape, and that the UK government was working to “move from donor to investor, from grants to expertise, putting partnership, and the focus on local needs at the centre of what we do” and encouraged others to take the same approach. 

The UK government is working to “move from donor to investor, from grants to expertise” – Yvette Cooper, UK foreign secretary

The conference took place as the UK and many high-income countries have substantially reduced their commitments to development aid, creating huge challenges for countries in the global south. It also puts large flows of private investment towards developing countries at risk, as development aid is crucial to provide the cheaper, high-risk capital needed to anchor blended finance transactions.

• Read more: Blended finance market should brace for impact of development aid cuts – Convergence warning

In her opening speech, Baroness Jenny Chapman (pictured below), the UK’s minister for international development, Latin America and Caribbean, said the current financing model was “wholly incapable of meeting the $1.3tn financing gap which Africa needs to deliver each year on the Sustainable Development Goals” and a “fundamental reset in our approach” was needed. 

She called for more partnerships across sectors – from government to business and philanthropy – and to give more agency to developing countries, “not top-down, lecturing, bureaucratic systems that tie governments up in red tape, [but] equal partnerships, combining expertise with local experience”.

She added developing domestic capital markets in the global south was crucial: “Domestic capital markets matter because they mobilise long-term, local-currency finance, allocate domestic savings more productively, and they reduce reliance on capital flows they don’t control.” 

She said there was a growing momentum for reform in developing countries to enable domestic capital mobilisation, and there were examples of how development finance institutions could help unlock investment from local pension funds. 

Conference participants were encouraged to sign the Global Partnerships Compact, a commitment to a number of principles that “shift power and strengthen local leadership”, according to the UK government. 

The compact commits signatories to “maintain the vital role of [overseas development assistance]” while using it “more strategically” to unlock wider private finance.

Top image: UK foreign secretary Yvette Cooper speaks at the Global Partnerships Conference last week. All images courtesy of FCDO.