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Green hydrogen: TotalEnergies of France to buy 25% stake in Adani New Industries

Gautam Adani and Patrick Pouyanné

Posted on June 15, 2022

Indian business conglomerate Adani Group and French energy behemoth TotalEnergies have entered into an agreement to jointly create the world’s largest green hydrogen ecosystem, the companies announced in a joint statement on Tuesday. A large part of this investment is expected to happen in Gujarat’s Kutch region, said a senior official close to the development.

As part of this strategic tie-up, TotalEnergies will acquire a 25% minority stake in Adani New Industries Ltd (ANIL) from Adani Enterprises Ltd (AEL), according to an official statement by the Indian company.

ANIL has proposed to invest more than $50 billion over the next 10 years in green hydrogen and its associated ecosystems, and in the initial phase, the company will develop green hydrogen production capacity of 1 million tonne every year before 2030.

“The strategic value of the Adani-TotalEnergies relationship is immense at both the business and ambition levels,” said Gautam Adani, chairman of 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 (research and development), market reach and an understanding of the end consumer. This fundamentally allows us to shape market demand. This is why I find the continued extension of our partnership to hold such great value. 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,” Adani said in a statement.

The valuation of the deal and other financial details have not been disclosed yet.

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

While Adani is expected to bring into the partnership its understanding of the Indian market, rapid execution capabilities, operations excellence and capital management philosophy to the partnership, TotalEnergies will bring to the table its knowledge of the global market, credit enhancement and financial strength to lower financing costs, and its expertise in underlying technologies.

“The complementary strengths of the partners will help ANIL deliver the largest green hydrogen ecosystem in the world, which, in turn, will deliver the lowest cost of green hydrogen to the consumer and help accelerate the global energy transition,” the statement said.

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

With this investment, the partnership between the Adani Group and TotalEnergies now covers LNG terminals, gas utility businesses, renewables businesses and green hydrogen production.

The Adani Group has drawn out plans to invest more than 70% of the budgeted capex of its energy vertical into clean and energy-efficient systems, sources said. The company is exploring the use of hydrogen for a number of its projects, including a proposed steel complex in Kutch in collaboration with South Korea’s POSCO.

Depending on its production methods, hydrogen can be grey, blue or green. Considered as one of the cleanest forms of energy, green hydrogen is produced by electrolysis through electricity generated from renewable sources of energy, such as solar and wind.

Scientists see hydrogen as the ‘fuel of the’ future, and Gujarat is emerging as India’s hub for green hydrogen.

The Gujarat government plans to launch a special policy to promote hydrogen energy as India aims to be a global leader in electrolyzer and green hydrogen production.

In his last Independence Day speech, Prime Minister Narendra Modi had stressed on the importance of transforming India into a hydrogen-based economy, while announcing the launch of the National Hydrogen Mission.

State-owned NTPC, India’s largest power utility, has planned a project in association with Gujarat Gas to blend hydrogen with piped natural gas (PNG). To begin with, NTPC aims to reach out to its 200-unit housing colony at Kawas near Surat by using around 100 cm/d of PNG, initially blended with hydrogen to the extent of 5% for domestic use. Later, the blending will be ramped up to 20%.

The blending project is among the five pilot projects being implemented by NTPC, including green hydrogen mobility, green methanol, energy storage, and green ammonia.

Reliance Industries Ltd earlier this year signed an MoU worth 5.95 lakh crore with the Gujarat government as part of its investment promotion activity for Vibrant Gujarat Summit 2022.

“To make Gujarat net-zero and carbon-free, RIL proposes to invest 5 lakh crore in the state over the span of 10-15 years to set up a 100-GW renewable energy power plant and green hydrogen ecosystem development,” the company said in an official statement.

Last year in June, RIL announced its plan to invest 75,000 crore over three years in the new energy sector, including solar power generation, hydrogen production, e-fuels, and energy storage under its ‘New Energy and New Materials’ division. The company revealed its plans to set up four production and manufacturing facilities at its 5,000-acre Green Energy Giga Complex in Jamnagar, Gujarat.

Meanwhile, the Centre has set a target to bring down the cost of green hydrogen from $4 per kg at present to $1 per kg by 2030, said an official aware of the developments.

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