Indian renewable energy company ACME Solar has inked an agreement to rope in external shareholders for a 250-megawatt solar power plant in the northwestern state of Rajasthan.

Danish development finance institution IFU has signed a shareholders’ agreement with ACME and the United Nations Office for Project Services (UNOPS) to develop and finance the project. UNOPS will co-invest through its Sustainable Investments in Infrastructure and Innovation (S3i) vehicle.

The project will provide electricity to the equivalent of 500,000 households and will be one of IFU’s largest renewable energy investments to date in terms of megawatt capacity installed. It will add to IFU’s large portfolio of investments in renewable energy, which has reached a total of 2GW.

The project will have a 25-year agreement with state-run Solar Energy Corporation of India Ltd (SECI) to sell power.

IFU will hold a 39% stake in the project. Its investment will be on behalf of the Danish SDG Investment Fund, which is backed by the Danish state, larger Danish pension funds and other private investors.

“The investment is in line with our ambition to create green, just and inclusive societies, because it will assist India in its green transition and provide additional energy supply to more people in India enabling them to improve their livelihood,” said Rahul Dubey, investment director at IFU.

The total cost of the project is €150 million. Looking at typical debt-to-equity ratio for such projects, the total equity component is likely to be around €37.5-45 million. This would translate into IFU’s investment of about €15-18 million, as per The Capital Quest’s estimates.

“This partnership is a key milestone towards ACME’s vision for developing a portfolio of 25 GW of renewable energy projects, which comes in line with India’s plans to achieve 450 GW of RE power by 2030,” said Manoj Upadhyay, founder and chairman, ACME Group.

This is the first renewable energy project to be signed following the India-Denmark Green Strategic Partnership, launched in September 2020.

ACME Solar has a portfolio of about 5 GWp, out of which 2.3 GWp is operating and 2.7GWp in under construction. The assets are spread across 13 states in India.

Earlier this month, ACME agreed to sell a 50% stake in a power plant in Rajasthan to Oslo-based renewable energy firm Scatec. The plant has a capacity of 900 MW with a total capital expenditure of $400 million.

Last year, Acme sold two solar projects in India totalling 400 MW to British private equity firm Actis. In another transaction in 2020, Malaysian state-run oil giant Petronas acquired two solar power plants from Acme with a total capacity of 100 MW.