French multinational energy company Total SA is investing $500 million to acquire a 50 per cent stake in Adani Group’s more than 2 GW of solar power portfolio and expand its partnership in India’s renewable energy sector.
Adani Green Energy Limited (AGEL), the renewables arm of India's largest privately-owned energy and infrastructure conglomerate Adani Group, operates solar energy projects in 11 Indian states with a cumulative capacity of over 2 GW.
As per the agreement, Total and AGEL will create a 50-50 joint venture into which AGEL will transfer its solar assets in operation.
All the projects benefit from nearly 25-year power purchase agreements (PPA) with national and regional electricity distributors, with a fixed rate.
Total is banking on the Indian government’s strong policy to support the renewable energy growth to enter the renewable energy business in a big way.
The country’s capacity should increase from its 81 gigawatts (GW) in 2019 to 225 GW by 2022.
“Total is fully engaged in the energy transition and to supporting India, a key country in the fight against climate change, in diversifying its energy mix through partnerships in natural gas and now in solar energy," said Patrick Pouyanné, chairman and CEO of Total.
“This interest in over 2 GW of solar projects represents another big step of our investment in India's energy sector. It will support our ambition to contribute to the deployment of 25 GW of renewable capacities by 2025. We are thrilled to extend the partnership with the Adani Group to renewable energies, which will allow us to benefit from its in-depth knowledge of the Indian electricity market.”
This transaction has a value of approximately $500 million and is in line with the group’s objective of double-digit returns on renewable projects, Total said, adding that the deal is subject to the approval of the relevant authorities.
Adani Green Energy Limited (AGEL) is a listed company 74.92 per cent owned by the Adani Group. AGEL currently holds a portfolio of 2,148 MW of installed solar capacity and 172 MW of installed wind capacity. They also have 475 MW of solar capacity and 1,505 MW of wind and 990 MW of hybrid under construction.
AGEL has a renewable portfolio of 5,290 MW, of which 2,320 MW is operational and 2,970 MW is under construction.
In the projects under construction portfolio, wind energy (which tends to be more capital-intensive than solar), constitutes 50.7 per cent of the mix. The total project cost for this is estimated at Rs14,400 crore.
“The investment reinforces the immense potential in India’s renewable energy sector, as well as Adani Group’s push to becoming the world’s largest solar power company by 2025 with a capacity of 18 GW and the biggest renewable energy firm by 2030,” Adani Group chairman Gautam Adani said.
Total is a major energy player that produces and markets fuels, natural gas and low-carbon electricity and is active in more than 130 countries.
Total is building a portfolio of low-carbon businesses that could account for 15 to 20 per cent of its sales by 2040. Total's gross low-carbon power generation capacity worldwide is currently close to 7 gigawatts, of which over 3 gigawatts are from renewable energies.