Adani Green Energy (AGEL) said on Monday that French energy giant Total SA will acquire 20% minority interest in the company from Adani Group. The deal, valued at around $2 billion, will also provide Total a seat on the board of directors of AGEL.
The transaction follows Total investing $510 million in April 2020 for the acquisition of 50% stake in AGEL’s 2,353 megawatt (MW) operational solar projects in the country. The acquisition is part of Total’s target of building a portfolio of 35,000 MW of renewable energy capacity globally by 2025.
Currently, AGEL’s operational renewable energy portfolio stands at 3,000 MW, with an equal capacity under construction.
“We are delighted to deepen our strategic alliance with Total, a global energy major, and welcome them as a significant shareholder in AGEL,” Gautam Adani, chairman of the Adani Group said. “We have a shared vision of developing renewable power at affordable prices to enable a sustainable energy transformation in India,” Adani added.
The average rate at which AGEL sells power is Rs 3.26/unit. Though it is higher than the record low rates of Rs 2/unit discovered in recent solar auctions, the tariff is lower than the average power purchase cost of Rs 3.6/unit to discoms across the country.
Apart from the aforementioned operational and under-construction renewable energy capacities, AGEL has 8,600 MW of projects in the pipeline, including the 8,000 MW solar plants to be built under the manufacturing-linked solar scheme.
As part of the scheme, Adani will supply power at Rs 2.92/unit to central government agency Solar Energy Corporation of India (Seci) and build 2,000 MW of solar manufacturing capacities. However, with lower tariffs discovered in recent auctions, Seci has been struggling to find buyers for electricity to be generated from this upcoming project.
Total has partnered with Adani to increase its presence in the country on other energy fronts as well. In October 2019, the two companies had formed a 50:50 venture to jointly own and operate several assets across the gas value chain, including imports and regasification liquefied natural gas (LNG) terminals.
Total has taken over 37.4% stake in Adani Gas and 50% stake in Adani’s Dhamra LNG project in Odisha. The two companies also plan to establish a joint venture to market LNG in India and Bangladesh and set up a retail network of 1,500 fuel service stations over the period of 10 years. “Given the size of the market, India is the right place to put into action our energy transition strategy based on two pillars: renewables and natural gas,” Patrick Pouyanné, chairman and CEO of Total, said.
