Adani ropes in TotalEnergies for its $50 bn green hydrogen venture

Billionaire Gautam Adani's logistics-to-energy conglomerate has roped in French supermajor TotalEnergies as a partner for its green hydrogen production venture that will see an investment of $50 billion over the next 10 years in producing the carbon-free fuel.

TotalEnergies will acquire 25 per cent shareholding in Adani New Industries Ltd -- the firm that houses Adani Group's new energy business -- for an undisclosed amount, the two firms said in separate statements.

"TotalEnergies has entered into an agreement with (Adani Group's flagship) Adani Enterprises Limited (AEL) to acquire a 25 per cent interest in ANIL," the French energy giant said.

ANIL will be the exclusive platform of AEL and TotalEnergies for the production and commercialisation of green hydrogen in India.

"ANIL will target a production of one million metric tons of green hydrogen per year (Mtpa) by 2030, underpinned by around 30 gigawatts (GW) of new renewable power generation capacity, as its first milestone," it said.

Adani group statement said the partnership, centered on green hydrogen, is expected to transform the energy landscape both in India and globally.

"ANIL's ambition is to invest over $50 billion over the next 10 years in green hydrogen and associated ecosystem," it said.

The French energy firm did not give any investment number in its statement.

In January, Adani Group had set up a new subsidiary, ANIL, to undertake green hydrogen projects, generation of low carbon electricity and manufacture of wind turbines, solar modules and batteries as it looks to become the world's largest renewable energy company and produce the cheapest hydrogen.

Adani had in November last year stated that his group will invest $70 billion in the new energy space of the next decade.

This included Adani Green Energy Ltd (AGEL), the world's largest solar power developer, investing $20 billion to develop a 2 GW per year solar module manufacturing capacity by 2022-23.

Hydrogen is a clean fuel that, when consumed in a fuel cell, produces only water. Hydrogen can be produced from a variety of resources, such as natural gas, nuclear power, biomass, and renewable power like solar and wind.

It can be used as transportation fuel for cars, as well as for producing portable power.

Hydrogen produced from coal is called brown hydrogen, and hydrogen produced from natural gas or petroleum is referred to as grey hydrogen.

Brown or grey hydrogen production combined with carbon capture and storage/sequestration is referred to as blue hydrogen.

Hydrogen produced with nuclear energy may be called pink hydrogen or clean hydrogen.

Green hydrogen is produced when it is split from water using electricity produced from renewable sources as solar or wind.

"In order to control green hydrogen production costs, 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," TotalEnergies said.

To start with, ANIL intends to develop a project to produce 1.3 million tonnes per annum 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.

TotalEnergies is already a partner in Adani Green Energy Ltd -- the renewable energy venture of the Adani group, as well as in Adani Total Gas Ltd -- the city gas distribution firm.

For the hydrogen venture, Adani group will bring to the table "its deep knowledge of the Indian market, execution capabilities, and operations and capital management excellence", while TotalEnergies will offer its thorough 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 French firm said.

"The strategic value of the Adani-TotalEnergies relationship is immense at both the business level and the ambition level," said Gautam Adani, Chairman, Adani Group.

"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 the market demand."

TotalEnergies chairman and CEO Patrick Pouyanné said future production capacity of 1 million tons per annum of green hydrogen will be a major step in increasing the French firm's share of new decarbonized molecules including biofuels, biogas, hydrogen, and e-fuels to 25 per cent of its energy production and sales by 2050.

ANIL aims to be the largest fully integrated green hydrogen player in the world, with a presence across the entire value chain, from the manufacturing of renewables and green hydrogen equipment (solar panels, wind turbines, electrolysers, etc.), to large-scale generation of green hydrogen, to downstream facilities producing green hydrogen derivatives, Adani Group said.

"With this investment in ANIL, the strategic alliance between the Adani Portfolio and TotalEnergies now covers LNG terminals, the gas utility business, renewables business and green hydrogen production," it said.

In 2018, TotalEnergies and Adani Group 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, a city gas distribution business.

In 2020, TotalEnergies acquired a 20 per cent minority interest in Adani Green Energy Limited (AGEL), then the largest solar developer in the world, 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.