TotalEnergies Invests $300 Million in Renewable Energy Joint Venture with India’s Adani Green Energy

French oil and gas giant TotalEnergies is making a significant move into renewable energy in India through a new joint venture with Adani Green Energy Limited (AGEL). The two companies announced on September 20th, 2023 that TotalEnergies will invest $300 million to acquire a 50% stake in a joint venture with AGEL focused on mega-scale renewable power generation.

The joint venture, named Adani Green Energy Twenty Three Limited, will see TotalEnergies and AGEL partner on setting up a renewable energy portfolio with generation capacity of 1,050 megawatts (MW) of solar and wind power across India. This investment marks TotalEnergies’ first major foray into India’s booming renewable energy market since acquiring a minority stake in AGEL in 2021. It also supports AGEL’s ambitious target of reaching 45 gigawatts (GW) of renewable energy capacity by 2030.

TotalEnergies Doubling Down on Renewables Growth in India

For TotalEnergies, the new $300 million joint venture represents a doubling down on renewable energy growth in India at a time when the country is rapidly building out its clean power infrastructure. TotalEnergies already owns a 19.75% minority stake in AGEL, which it acquired in 2021 for $2.5 billion. With this latest investment, TotalEnergies is looking to capitalize on India’s potential as one of the world’s fastest growing renewable energy markets.

According to Patrick Pouyanné, Chairman and CEO of TotalEnergies, India is critical to the company’s renewable energy strategy. He stated that TotalEnergies aims to “deploy at least 25 GW of renewable power generation by 2025 globally” and India factors prominently in achieving that goal. This new joint venture builds on TotalEnergies’ existing portfolio in India, which includes close to 5 GW of renewable energy projects already in operation or under development.

The $300 million investment will provide TotalEnergies with a 50% ownership stake in the joint venture alongside partner AGEL, which will hold the remaining 50% interest. The joint venture company will own and operate the renewable energy portfolio.

1,050 MW Solar and Wind Portfolio to Power TotalEnergies’ Renewable Ambitions

The Adani Green Energy Twenty Three Limited joint venture will focus on developing a renewable energy portfolio consisting of solar and wind power assets totaling 1,050 MW of generation capacity.

While full details of the planned projects have not been released yet, AGEL said in its announcement that the joint venture will house initial generation capacity of 835 MWac of solar power and 215 MW of wind power. Under the agreement, AGEL will contribute its extensive expertise in developing utility-scale renewable projects in India as well as its strong track record of execution.

This 1,050 MW portfolio will significantly expand TotalEnergies’ renewable energy footprint in India. It provides TotalEnergies with substantial additional generation capacity to power its growing clean energy ambitions in a country that is expected to see massive growth in renewables over the next decade.

India currently has over 100 GW of installed renewable energy capacity and aims to have 450 GW of renewable power capacity by 2030 under its climate commitments. This will require approximately $500 billion in investment over the next 7-8 years. TotalEnergies is positioning itself to capitalize on this exponential growth through partners like AGEL that have established development experience and pipelines of renewable projects.

Joint Venture Builds on TotalEnergies’ Existing Partnership with AGEL

The formation of this new joint venture builds on the existing strategic alliance between TotalEnergies and AGEL. In 2021, TotalEnergies acquired a 20% minority stake in AGEL for $2.5 billion. This made TotalEnergies the largest shareholder in AGEL, one of the world’s leading renewable power developers.

At the time, TotalEnergies singled out AGEL’s industry-leading growth in renewable power generation capacity in India, highlighting annual growth of about 25% each year since 2018. TotalEnergies saw its investment as an opportunity to partner with a leading player in the competitive Indian renewable energy market.

The new joint venture takes that partnership further by co-developing renewable energy projects and leveraging the strengths of both companies. TotalEnergies brings global scale, technical expertise, and financial strength while AGEL contributes proven Indian market experience, development capabilities, and local execution skills.

In addition to its stake in AGEL, TotalEnergies also has a partnership with Indian energy major Adani Group across liquefied natural gas (LNG) terminals, gas utilities, and renewable power generation. This latest renewable energy joint venture reinforces the close ties between TotalEnergies and Adani as they work together to grow India’s energy sector.

Joint Venture Provides Platform for Significant Renewable Capacity Additions

While starting at 1,050 MW, the Adani Green Energy Twenty Three Limited joint venture is expected to serve as a platform for even greater renewable energy investments between TotalEnergies and AGEL in the future.

The partnership model creates a readymade structure for the two companies to jointly develop additional renewable energy projects as they look to capitalize on the projected investment of $500 billion in India’s renewable power sector through 2030. AGEL has a stated goal of reaching 45 GW of renewable power capacity by 2030.

Gautam Adani, Chairman of the Adani Group, said the joint venture “marks the beginning of one of the most comprehensive partnerships” between the two firms across the clean energy value chain.

With TotalEnergies bringing its financial strength and desire to scale up renewable power capacity quickly, the joint venture could rapidly expand beyond its initial 1,050 MW portfolio. This would allow TotalEnergies to leverage AGEL’s unmatched pan-India presence and deep expertise in renewable energy project execution to achieve its global renewable ambitions.

TotalEnergies’ Renewable Energy Investments Align with India’s Clean Energy Goals

TotalEnergies’ latest renewable energy investment closely aligns with India’s ambitious target of reaching 450 GW of installed renewable power capacity by 2030. This forms a core part of India’s commitment under the Paris Climate Agreement to reduce the emissions intensity of its GDP by 33-35% from 2005 levels.

To reach its 2030 renewables target, India needs to deploy large-scale solar, wind, and other clean power projects rapidly over the next decade. The Indian government has instituted policies to drive this growth like production-linked incentives and favorable tariff regimes for renewable power producers.

TotalEnergies’ big bet on partnering with AGEL signals its confidence in India’s political commitment to aggressively expand renewables capacity and its belief that ample growth opportunities exist despite intensifying competition. By committing investment through a joint venture, TotalEnergies is set to benefit from and support the realization of India’s huge renewable energy goals.

Gautam Adani emphasized this alignment between TotalEnergies’ move and India’s renewable energy vision: “The partnership rests on the pillars of shared vision and values of decarbonization and a commitment to sustainability. The complementarity of our strengths makes this a truly formidable partnership.”

Joint Venture Provides Boost Amid Controversy Around Adani Group

The new joint venture and $300 million investment from TotalEnergies provides a timely boost to AGEL and its parent company Adani Group, which have recently faced turbulence due to controversy and allegations.

In late January 2023, American short-seller firm Hindenburg Research released a report alleging significant stock manipulation and use of offshore shell companies by Adani Group to boost valuations. It claimed the group had unsustainable debt levels.

Adani Group forcefully denied these allegations, but its seven listed stocks have lost over $100 billion in market capitalization since the report was published. Against this backdrop, TotalEnergies’ expansion of its partnership with AGEL through the joint venture signals ongoing confidence in Adani’s renewable energy business.

TotalEnergies did refer to the situation in its announcement of the joint venture, saying its investment “is undertaken in compliance with its own stringent governance processes and code of conduct.” But its willingness to invest $300 million more just months after the controversy began illustrates trust in AGEL specifically.

While Adani Group navigates turbulent times, TotalEnergies’ continued faith in AGEL and concrete investment offer credibility and suggest this strategic renewable energy relationship has staying power. That may be crucial as AGEL works to maintain rapid growth.

Conclusion

TotalEnergies’ $300 million investment to form a 50-50 joint venture with Adani Green Energy highlights the French energy giant’s growing focus on rapidly scaling up renewable power generation in India. While TotalEnergies set its sights on global renewable energy leadership, India and partners like AGEL are set to play a key role in achieving its ambitions.

This new joint venture, starting with 1,050 MW of solar and wind projects, creates a platform for TotalEnergies and AGEL to collaborate on developing many more gigawatts of clean power as India works towards its target of 450 GW of renewable capacity by 2030. For AGEL, it provides further validation and a vote of confidence from a major global energy player like TotalEnergies even amid recent controversy facing the Adani Group.

With complementary strengths and closely aligned goals around sustainable growth in renewables, the stage is set for TotalEnergies and AGEL to foster a long and fruitful partnership that benefits from and supports India’s renewable energy priorities. The potential exists for this joint venture to serve as a high-impact model for how international collaborations can effectively accelerate national clean energy transitions.

Frequently Asked Questions

Q: How much is TotalEnergies investing in the new joint venture with Adani Green Energy?

A: TotalEnergies is investing $300 million to acquire a 50% stake in the joint venture with Adani Green Energy.

Q: What generation capacity will the joint venture’s renewable energy portfolio have?

A: The joint venture’s initial portfolio will consist of 1,050 MW of renewable power capacity, including 835 MWac of solar and 215 MW of wind generation assets.

Q: Why is TotalEnergies focused on investing in India’s renewable energy market?

A: India represents a key growth market for renewable energy investment. TotalEnergies aims to capitalize on the projected $500 billion in investment needed for India to reach its 450 GW renewables target by 2030.

Q: How does this joint venture build on the existing relationship between TotalEnergies and Adani Green Energy?

A: It deepens the strategic partnership first formed in 2021 when TotalEnergies acquired a 20% stake in AGEL. The new joint venture takes the relationship further by co-developing renewable projects.

Q: What allegations did a short-seller report make about Adani Group earlier in 2023?

A: In late January 2023, Hindenburg Research published allegations of stock manipulation and use of offshore shell companies by Adani Group. Adani forcefully denied these claims.

Q: Does TotalEnergies’ new investment indicate ongoing confidence in Adani Green Energy and its growth prospects?

A: Yes, TotalEnergies’ willingness to invest $300 million more just months after the controversy signals confidence specifically in AGEL’s renewable energy business.

Final Thoughts

  • The TotalEnergies-AGEL joint venture is a powerful example of an international collaboration aimed at supporting national renewable energy goals and sustainable growth.
  • India’s hugely ambitious 2030 target for 450 GW of clean power capacity provides immense opportunities for companies that can execute projects rapidly and at scale.
  • TotalEnergies’ investment approach shows that controversies faced by partners like Adani Group do not necessarily damage long-term relationships grounded in complementary strengths and shared vision.
  • Renewable energy development depends on creative partnerships between companies that bring financial resources, technical skills, and on-the-ground expertise. This allows nations to accelerate the transition away from fossil fuels.
  • The TotalEnergies-AGEL joint venture will hopefully serve as a model for more creative collaborations between multinational energy corporations and national developers seeking to speed up deployments of clean power.

Alexander focuses on breaking news stories and ensuring we offer timely reporting on some of the latest stories released through market wires. He has previously spent over 5 years as a trader in us stock market and is now semi-retired. Now he works for investingbizz.com specializing in quicker moving active shares with a short term view on investment opportunities and trends. He covers financial sector news.

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