French oil giant Total has signed a deal worth around $500m (€454m) with the Adani group to acquire a 50% stake in the Indian conglomerate's vast solar portfolio.
Total and Adani Green Energy (AGEL), part-owned by the Adani group, will create a 50/50 joint venture developing solar projects in more than 11 Indian states with a cumulative capacity of over 2GW.
All the projects benefit from nearly 25-year fixed-rate power purchase agreements with national and regional electricity distribution companies.
Total said the deal, which is subject to approval by the relevant authorities, is in line with its overall objective of double-digit returns on renewables projects.
Total already had a presence in the Indian solar PV market prior to the Adani deal through Total Eren's Eden Renewables joint venture with EDF Renewables, which has over 200MW under the ownership and recently signed PPAs for a further 700MW of assets, analysts at Wood Mackenzie said.
“With this partnership, Total’s solar footprint jumps by around 1GW through the 50% acquisition of 2.1GW of Adani’s current operational portfolio in India," Wood Mackenzie analyst Rishab Shrestha said.
“India continues to offer gigawatt-size tenders with huge individual project sizes and a market that continues to grow. The country auctioned around 11GW of solar last year. Adani’s future pipeline remains strong with around 500MW of solar PV under construction in India and about 200MW operational and pipeline projects in Australia."
The analyst adds, however, that payment delays from utilities to renewable IPPs and renegotiation of tariffs in India have worsened and made access to capital difficult. Domestic capital now comes at a premium.
Total is building a portfolio of low-carbon businesses that could account for 15% to 20% of its sales by 2040. Its gross low-carbon power generation capacity worldwide is currently around 7GW, of which 3GW is from renewable energies.
The solar deal marks the second major agreement between Total and the Adani group in recent months. Last October it bought a 37.4% stake in distribution company Adani Gas to expand its liquefied natural gas presence in India.
Last year the founder and chairman of the National Solar Energy Federation of India Pranav Mehta told Recharge the country would not hit its national solar target of 100GW by 2022 but predicted the figure to be somewhere between 60GW and 80GW.
Despite its solar ambition, the Adani group and its suppliers have been attacked by climate activists for a project to build the Carmichael coal mine project in Australia, which is slated to be one of the largest in the world.
UPDATE to add analyst comment