InvestorQ : What is the significance of the deal signed between Adani group and Total of France?
Mahima Roy made post

What is the significance of the deal signed between Adani group and Total of France?

3 weeks ago

In a recent announcement, Adani New Industries (ANIL), a subsidiary of Adani Enterprises, and TotalEnergies are jointly exploring the green hydrogen opportunity. They will explore a huge $50 bn investment into green hydrogen over the next few years. In the process, they will create the world’s largest green hydrogen ecosystem in the Kutch region of Gujarat. Adani plans to play a significant role in the new energy ecosystem emerging. However, the collaboration between Adani and Total started way back in 2018.

Two of India’s largest business groups, Reliance group and the Adani group, are extremely bullish on the green hydrogen segment. Let us spend a moment on what green hydrogen is all about. You know that hydrogen is made from water through the process of electrolysis to separate hydrogen and oxygen. Green hydrogen is about the nature of electricity used. When renewable sources of green energy are used to produce hydrogen from water, it is popularly known as green hydrogen.

Let us get back to the deal structure. To begin with, TotalEnergies will acquire a 25% stake in Adani New Industries Ltd. (ANIL), a subsidiary of Adani Enterprises Ltd. Now Adani Enterprises typically holds the emerging businesses of the Adani group like airports, data centres, infrastructure, etc. It is the holding company *** incubation centre of the Adani group. In fact, most of the new age businesses are housed under Adani Enterprises. ANIL is one such business dedicated entirely to new energy sources.

The joint venture will invest $50 billion over next 10 years in setting up the green hydrogen ecosystem. IN fact, the JV plans to straddle the entire green hydrogen ecosystem. It will aim to produce the world’s least expensive electron and that would logically lead to producing the world’s least expensive Green hydrogen. ANIL will develop green hydrogen production capacity of 1 million ton per annum (MTPA) by the year 2030 at Mundra in Kutch. However, the real story likes in the de-risked model.

Here is how it will work. The idea here is to become a fully integrated green hydrogen player in the world. To de-risk its business model it will establish a presence across the entire value chain. ANIL will manufacture renewables and green hydrogen equipment (which includes solar panels, wind turbines, electrolysers). It will also undertake large scale generation of green hydrogen as well as produce green hydrogen derivatives. By spreading itself across the value chain, it will be able to reduce cost and have better control.

To sum it up, TotalEnergies gets a low cost and efficient method to tap the ever increasing opportunity in addressing the needs of European businesses. Adani gains access to the huge European market. It just works both ways.