Big Oil Is Buying Into The Solar Boom

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By Felicity Bradstock

After a difficult year in the oil world, Total is planning to invest in heavily India’s solar sector going into the next decade.  The French company plans to invest $2.5 billion for a 20 percent stake in Adani Green Energy Ltd., the world’s largest solar developer. While Total plans to continue investing heavily in fossil fuels, the shift to green energy responds to calls from regulators and governments to plan for a low-carbon future.

The investment sees Total strengthen their partnership with Adani, planning for the future of India’s renewable energy development.

The deal means Total will hold a 50 percent stake in a 2.35 GWac portfolio of operating solar assets owned by AGEL as well as a 20 percent stake in AGEL. They will also have a seat on the company’s Board of Directors.

Founded in 2015, AGEL is the biggest single location solar power project in the world, located in Kamuthi, India. Their aim is to reach 25 GW of renewable power generation by 2025. This goes a long way to achieving Total’s aim of 35 GWp of gross production capacity from renewable sources by that same year, with an annual capacity growth of 10 GWp from there on.

Patrick Pouyanné, Chairman and CEO of Total stated of the acquisition “Our entry into AGEL is a major milestone in our strategy in the renewable energy business in India put in place by both parties. 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.”

At present, India is the world’s third-largest energy consumer, following China and the USA. It is also the 4th largest importer of liquified natural gas (LNG). While India imports both oil and gas, investment in the sector suggests India is set to produce significantly more energy over the next decade, as well as establishing its renewables industry.

Solar energy in India has boomed in recent years, thanks to its 300 days of sunshine each year. In the first quarter of 2020 solar capacity totalled 36.6 GW, with an expected increase to 100 GW by 2022.

The country’s energy sector has been innovative in its solar design. One of the main complaints about solar panels is the vast amount of space they take up. However, India’s “solar canals”, solar panels covering irrigation canals, demonstrate how they can be adapted for a more practical use of space. Covering canals with panels avoids the expensive use of agricultural land to produce energy.

The share of solar power-produced electricity has increased significantly in recent years, currently at around 22 percent, up from around 10 percent in 2014-15.

As well as renewables, India’s oil and gas sector has been going from strength to strength. In October 2020 ahead of the India Energy Forum it was announced that India could see an investment of $206 billion in oil and gas over the next eight to ten years if it continues at its current rate. Prime Minister Narendra Modi was seen encouraging investment in India’s energy sector, following a damaging year from the sector across other regions.

According to government predictions, gas infrastructure can expect $67 billion in investment, with further investment across oil and gas exploration and production by majors such as Total, Exxon Mobil and Shell.

As Total deepens its involvement in India, it appears to be the hotspot for both traditional and green energy over the next decade.
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