Norfund, Norway’s development finance institution, has sold all the shares in SN Power to Norwegian energy developer Scatec Solar for $1.17bn.

Completion of the transaction is subject to approvals from relevant competition authorities, partners and lenders.

Norfund has been instrumental in building a leading hydropower company in developing countries. 

Each year, SN Power plants produce power equivalent to the electricity consumption of seven million people and help avoid three million tonnes of carbon emissions. 

Tellef Thorleifsson, CEO of Norfund said: “Our investment in SN Power has yielded an annual return (IRR) of 19% in NOK (12% in USD).”

“We have thus delivered profit and enabled significant social and economic development,” he added.

“This deal means that we can quickly reinvest our capital. Teaming up with existing and new partners, we will capture opportunities in renewable energy that we so far have had to turn down,” said Thorleifsson. 

With the sale of SN Power all shares and employees in the company will be incorporated into Scatec Solar. 

Norfund receives $966m of the settlement in cash and $200m as a seller credit.

SN Power’s facilities in Zambia and Panama will remain owned by Norfund.

The parties will collaborate on SN Power’s projects in Africa, where Norfund retains a 49% stake.

The current collaboration in solar energy will also continue.  

Hydropower and solar PV are complementary, yielding new project opportunities and further portfolio optimization.

Access to renewable energy is crucial for developing countries to grow out of poverty without exacerbating the climate crisis, and the World Bank has estimated a need for $900bn in renewable energy investments by 2025 to meet developing countries’ energy needs.

COVID-19 has also hit developing countries hard, with a slowdown in growth and rapidly rising unemployment. 

“We see great opportunity in access to new growth markets as well as floating solar on reservoirs in combination with hydropower,” said Raymond Carlsen, CEO of Scatec Solar.