TotalEnergies buying stake in Adani to bring forth ‘largest green hydrogen ecosystem in the world’

French energy giant TotalEnergies has inked a deal to acquire a stake in a subsidiary of Adani Enterprises Limited (AEL), which will enable it to further pursue its low carbon hydrogen strategy while joining forces with AEL to produce and commercialise green hydrogen in India.

Since TotalEnergies is convinced that renewable and low-carbon hydrogen will play “a major role in the energy transition,” the French player is working with its suppliers and partners to decarbonise all the hydrogen used in its European refineries by 2030. Once accomplished, this will represent a reduction in CO₂ emissions of 3 million tons per year.

According to the energy major, the renewable hydrogen production capacity currently under development in Europe and India will contribute to its ambition to increase new molecules to 25 per cent of its energy production and sales by 2050 – including biofuels, biogas, hydrogen, and e-fuels.

To this end, TotalEnergies entered into an agreement with AEL to acquire a 25 per cent interest in Adani New Industries Limited (ANIL), which will be the two companies’  “exclusive platform” for the production and commercialisation of green hydrogen in India. TotalEnergies says that Adani New Industries Limited will target the production of one million metric tons of green hydrogen per year (Mtpa) by 2030 as its first milestone. This will be underpinned by around 30 gigawatts (GW) of new renewable power generation capacity.

Commenting on the signing of the deal, Patrick Pouyanné, Chairman and CEO of TotalEnergies, remarked: “TotalEnergies’ entry into ANIL is a major milestone in implementing our low carbon hydrogen strategy, where we want not only to decarbonise the hydrogen used in our European refineries by 2030, but also to pioneer the mass production of green hydrogen to meet demand, as the market will take off by the end of this decade.

“We are also very pleased with this agreement, which further strengthens our alliance with the Adani Group in India and contributes to the valorization of India’s abundant low-cost renewable power potential.” 

Furthermore, ANIL will be integrated along the value chain – from the manufacturing of equipment needed to generate renewable power and produce green hydrogen to the production of green hydrogen itself and its transformation into derivatives, including nitrogenous fertilizers and methanol, both for the domestic market and export – in order to control green hydrogen production costs.

At the onset, the company intends to develop a project to produce 1.3 Mtpa of urea derived from green hydrogen for the Indian domestic market, as a substitution for current urea imports and will invest around $5 billion in a 2 GW electrolyzer fed by renewable power from a 4 GW solar and wind farm.

Gautam Adani, Adani Group Chairman, stated: “The strategic value of the Adani-TotalEnergies relationship is immense at both the business level and the ambition level. In our journey to become the largest green hydrogen player in the world, the partnership with TotalEnergies adds several dimensions that include R&D, market reach and an understanding of the end consumer. This fundamentally allows us to shape market demand.”

The French energy major further elaborates that Adani’s portfolio will bring its deep knowledge of the Indian market, execution capabilities, and operations and capital management to this partnership. On the other hand, TotalEnergies will provide its understanding of the global markets, expertise in renewable technologies and large-scale industrial projects, and financial strength, enabling ANIL to lower its financing cost.

The strengths that the two players are bringing to the table are expected to help ANIL “deliver the largest green hydrogen ecosystem in the world, which will enable the lowest green hydrogen cost to the consumer.”

This investment in ANIL is seen as another “major step” in the strategic alliance between TotalEnergies and Adani Group, which will amplify the “key role” that TotalEnergies and Adani intend to play in the energy transition, and in helping India decarbonise its mobility, industry, and agriculture, while also contributing to the country’s energy independence.

“Our confidence in our ability to produce the world’s least expensive electron is what will drive our ability to produce the world’s least expensive green hydrogen. This partnership will open up a number of exciting downstream pathways,” added Adani.

TotalEnergies and Adani have a relationship spanning years, which goes back to 2018 when the two players embarked on an energy partnership with the development of a joint LNG business – from regas terminals to LNG marketing – and investment by TotalEnergies in Adani Total Gas Limited.

However, this was not the only time the two companies collaborated, as TotalEnergies opted in 2020 to acquire a 20 per cent minority interest in Adani Green Energy Limited (AGEL) – the largest solar developer in the world back then – along with a 50 per cent stake in a 2.35 GWac portfolio of operating solar assets owned by AGEL, for a total investment of $2.5 billion.

When it comes to TotalEnergies’ latest projects and activities elsewhere in the world, it is worth reminding that the energy giant recently made a final investment decision on an $850 million project offshore Angola to further develop the CLOV complex located in Block 17.

Together with its partners – Equinor, ExxonMobil, BP, and Sonangol –  TotalEnergies decided to go forward with the project to increase production and reduce operating costs.