French energy producer Total has officially announced its joint venture (JV) in solar energy with Adani Green Energy Limited (AGEL), the renewable energy subsidiary of Indian conglomerate Adani. The Indian Competition Commission (ICC) has approved the transfer of ten solar power generation assets from Adani Green Energy to the JV.
The assets proposed to be acquired by the Adani Green-Total joint venture include TN Urja, Essel Urja, PN Renewable Energy, PN Clean Energy, KN Indi Vijaypura Solar Energy, KN Bijapura Solar Energy, KN Muddebihal Solar Energy, KN Sindagi Solar Energy, Essel Bagalkot Solar Energy and Essel Gulbarga Solar Power. All projects covered under the deal operate under long-term power purchase agreements (PPAs) with state power distribution companies. The average remaining term of the PPAs is around 21 years.
Following the transfer of assets, the Adani Green-Total joint venture will acquire the 100 per cent stake in the solar portfolio, with Total buying half of the stake for $510 million. As part of an option provided for in the initial contract, Total and AGEL have agreed to extend this portfolio from 2.1 to 2.3 GW through the contribution of new solar farms. The expansion comprises a 100 MW and a 30 MW facility in northern India and a 75 MW installation in west India.
The 50/50 JV between Adani Green and Total was set up in April 2020. The Indian firm noted that its formation aligns with its goal of establishing a 25-GW renewable energy portfolio by 2025.
Total chief executive Patrick Pouyanne said, “With an ambitious target of 175 GW of installed capacity by 2022, India is a strong growth area for renewable energy. Since last year, the group has strengthened its commitment in India with around 5GW of solar projects in the country, in line with its ambition to become a world leader in renewable energies. We are very pleased to further expand our partnership with the Adani Group.” AGEL has 14 GW of operating, under-construction and awarded renewable power projects catering to investment-grade counterparties.
REGlobal’s Views: The deal is a win-win for both Total and Adani. On one hand, it offers Total an access to the vast Indian solar power market and on the other hand, it has provided significant amount of funds to AGEL to pursue its green expansion plans.