Oil Giant Total Buys Stake in World's Biggest Solar Developer -- Update
January 18 2021 - 4:40PM
Dow Jones News
By Sarah McFarlane
LONDON -- French energy giant Total SE said it would pay $2.5
billion for a 20% stake in the world's largest solar developer, the
latest move by an oil major to expand in renewable power.
Total said Monday the investment in Adani Green Energy Ltd.
would help it meet its targets for generating more power from
low-carbon sources amid a continuing global transition away from
fossil fuels -- a shift some analysts say is being accelerated by
the pandemic.
The company, along with other oil majors including BP PLC and
Royal Dutch Shell PLC, has pledged to increase spending on
renewable energy such as wind and solar power in an effort to
reduce carbon emissions. Total plans to spend $3 billion a year on
renewables by 2030, around 20% of its annual investment budget and
up from $2 billion last year.
The Adani deal gives Total exposure to a leading renewables
business in India, one of the world's fastest-growing markets for
energy demand. Adani has 54 wind and solar projects in operation
across the country, including one of the world's largest solar
projects in Kamuthi, Southern India. Based on existing generating
capacity and the projects in its pipeline, Adani is the world's
largest developer of solar power, Total said.
As part of the deal, Total is also taking a 50% stake in a
portfolio of Adani's solar assets and getting a seat on the
company's board. The move will help Total toward its goal of having
35 gigawatts of renewable power capacity by 2025, up from around 7
gigawatts last year.
"Given the size of the market, India is the right place to put
into action our energy transition strategy based on two pillars:
renewables and natural gas," said Total Chief Executive Patrick
Pouyanné.
Total and Adani Group, one of India's largest infrastructure
conglomerates, have previously made other joint investments,
including in liquefied-natural gas.
Major oil companies have boosted their activities in renewable
energy in recent years, anticipating that demand for oil will
eventually decline, as more of the global economy becomes
electrified. New technologies such as electric vehicles, for
example, are expected to increase demand for electricity, while
denting requirements for oil-based transport fuels such as gasoline
and diesel.
Monday's deal isn't the first time Total has invested in solar.
In 2011, the company bought a majority stake in U.S. solar panel
manufacturer SunPower Corp. However, following several years of
losses, SunPower spun off its panel-making business in August to
focus on solar-panel installations. Total remains a shareholder in
both SunPower and the new Singapore-based company Maxeon Solar
Technologies Ltd.
Other major oil companies have also invested in the solar
industry. BP took a stake in Lightsource Renewable Energy in 2017
and has since boosted its holding. The same year, Shell invested in
Singapore-based Sunseap Group Pte Ltd., followed by an investment
in Cleantech Energy Corporation Pte Ltd.'s solar business in
2018.
Write to Sarah McFarlane at sarah.mcfarlane@wsj.com
(END) Dow Jones Newswires
January 18, 2021 16:25 ET (21:25 GMT)
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