Oil Major Total Buys Texas Solar Projects

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Feb 05, 2021, 2:30 PM CST


France’s oil and gas supermajor Total is buying four large-scale solar power projects plus battery storage assets in Texas, with which it plans to meet the electricity demand of all its industrial sites in the United States, including the Port Arthur refining and petrochemicals platform and La Porte and Carville petrochemical sites.

The French oil major, which has been boosting its renewable electricity portfolio and has been signing lots of power purchase agreements (PPAs) for green energy in recent months, is buying the four solar projects of a total of 2.2 gigawatts (GW) plus 600 MW of battery storage assets from SunChase Power and private energy investment firm MAP RE/ES. All projects, each with co-located battery energy storage systems (BESS), are in industrial areas near Houston with high electricity demand and are expected to come online between 2023 and 2024, Total said on Friday.

The oil major will commit to a 1-GW corporate PPA sourced from this solar power and energy storage portfolio to cover all the electricity consumption of its operated industrial sites in the U.S., including those in Port Arthur, La Porte, and Carville.

“With this latest acquisition, Total is now developing close to 4 GW of renewable power capacity in the U.S., thus contributing to our objective to reach close to 35 GW of renewable generation capacity by 2025,” Total’s chairman and chief executive Patrick Pouyanné said in a statement.

At the end of 2020, Total’s gross power generation capacity worldwide was around 12 GW, including nearly 7 GW of renewable energy.

Total was the second-largest corporate buyer of clean energy globally in 2020, after Amazon, research by BloombergNEF (BNEF) showed last month. The French oil and gas major Total signed 3 GW of PPAs last year.

Total has acquired the largest renewable energy portfolio among European oil supermajors since Big Oil started announcing last year net-zero targets and pledging significantly increased investments in renewables, according to Bloomberg data. Since announcing its new strategy and net-zero goals in September 2020, Total has bought as much as 8.8 GW of renewable electricity capacity, either operational or in construction or development phases.

By Tsvetana Paraskova for Oilprice.com

SOURCE: OILPRICE.COM



Total chief warns of renewable energy bubble
Patrick Pouyanné says oil supermajors are competing over a still scarce supply of renewable assets

Renewable energy assets are in a bubble that has led to a string of deals with “crazy” valuations, according to the chief executive of Total, one of the world’s biggest oil and gas companies.

The warning from Patrick Pouyanné comes as the industry’s heavyweights are caught between sustaining fossil fuel-based businesses that generate the bulk of both their profits and the cash for dividends, while facing louder calls to increase investment in clean energy.

Total is no exception. In a wide-ranging interview, Pouyanné said he wants the group to be recognised not “as an oil and gas company, but as an energy company”.


The Paris-based multinational has pledged billions in renewables investment, targeted net-zero emissions by 2050 and proposed renaming the company TotalEnergies, which its shareholders will vote on in May.

However, “there is a bubble” in the renewables sector, Pouyanné cautioned. Valuations that are often up to 25 times earnings are “just crazy today”, the Total chief added, putting that down to the short supply of assets of a significant scale. They are “too scarce”.

“I will not buy, but I think I would not be surprised to see one of my European peers spending money,” he said. “A banker came to me [about another deal] and said ‘If you don’t buy it, BP will buy it’. I said, OK, but at this price, why should I buy that? Explain it to me.”


BP’s Dev Sanyal, who is responsible for its alternative energy business, said last week that value is the “key driver” when the group does deals and that it would not just invest in any asset to meet renewable targets.

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The industry’s paradox
In a sign of the escalating pressure on the sector, major institutional investors have threatened to ditch their stakes in oil and gas companies altogether unless they do more to combat climate change.

Pouyanné, who has spent more than two decades at Total and took over just days after the death of his predecessor Christophe de Margerie in a plane crash in 2014, admitted public sentiment had shifted faster than anyone in the industry imagined just a few years ago.

But the 57-year-old decried as a “paradox” the view that “we will solve the climate change challenge just because there is no more equity invested in oil and gas majors, that’s something completely wrong.”

“Even if BP, Total and Shell divest from oil and gas it does not change anything,” added Pouyanné, arguing that selling assets to other producers who may be less mindful does little to help.

State-owned oil companies, including the likes of Saudi Aramco or the Abu Dhabi National Oil Company, “are not prepared to stop producing” and if Total cuts back then “Russian companies say, ‘all that is quite good for us’ because they will get the asset”.

Although the pandemic left Total with a loss of $7.2bn last year as oil prices slumped, the group has ploughed ahead with its net-zero plan.

Fproduction%2Fec1636ea-076b-482a-ba72-4b2288a9fb6b.jpg
Total and Engie’s La Mede project in France © Total

Despite Pouyanné’s unease over valuations, renewables, chiefly solar and wind, are a big part of the group’s future. While Total and BP are prioritising low-carbon power generation, Shell is focusing on selling electricity instead. The French group has said it would spend more than $2bn this year on electricity and clean energy, seeking 10 per cent returns on the investments.

It aims to generate more than $1.5bn in cash flow from its renewables operations in 2025, up from about $100m pre-pandemic in 2019. However, this is still a fraction of the $27bn in cash flow from operations it generated that year, largely from its traditional businesses.

The group has paid $2.5bn for a 20 per cent stake in Adani Green Energy and a slice of its solar business, deepening its presence in India. It has also bought solar and energy projects in Texas, and with Engie is developing the largest site in France for the production of green hydrogen.

od%2Fb03d11b0-7057-11eb-8555-2ff5b4fc2f68-standard.png

The Adani investment “will probably be the only [big] deal we can do” this year, Pouyanné said, adding that Total would focus on smaller deals.

The Normandy-born chief executive runs Total with a firm grip, both managing day-to-day operations and stitching together some of its biggest deals with little help from bankers or his top executives — such as the $7.5bn acquisition of mostly North Sea oil assets from Denmark’s Maersk in 2017.

The former rugby player went to the École Polytechnique and then the École des Mines in Paris, a top engineering school, making him what the French refer to as one of the “X-Mines” who have a large role in running the country’s industrial base.

Pouyanné is unapologetic about the need to develop Total’s fossil fuel businesses to help generate the cash for green investments. The group expects its oil production to remain stable, but its gas business is growing. The $1.5bn acquisition of liquefied natural gas assets from Engie in 2017 catapulted Total to number two in the global market behind Shell.

Unlike BP, which plans to shrink its hydrocarbon production by 40 per cent, Pouyanné is warier about diluting the group’s traditional business. “If you lose part of your source of cash and you are not able to finance your development, then you have an imbalance,” he said.

Not gone unscathed
Even as oil prices crumbled last year, Total, which has 100,000 employees spanning more than 130 countries, was the only European oil major to keep its dividend intact. Its stock tumbled 29 per cent last year, but fared better than many peers.

“If an oil and gas major is not able to go through cycles, I don’t know what we are able to offer our investors,” said Pouyanné.

Total had a stronger balance sheet and lower debt levels than its peers before the pandemic hit “which put less pressure on executives to do something about the dividend,” said Biraj Borkhataria, an analyst at RBC Capital Markets.

“Still, it has not gone unscathed through each downturn. Equity investors have been diluted on multiple occasions, including from issuing discounted shares and hybrid bonds,” he added.

Fproduction%2F3d0f966e-2b4e-4ea3-86a9-48a0c45b7cb8.jpg
Despite Patrick Pouyanné’s unease over valuations, renewables, chiefly solar and wind, are a big part of the group’s future © Pierre Oliver / Capa Pictures / Total

In a period of both promise and peril for oil supermajors, Total has dismissed the suggestion by bankers of splitting off its renewables arm as a separate listed company, believing its clean energy business will still need the financial firepower currently provided by fossil fuels.

While a firm believer in renewables, the Total chief said the narrative over the shift to greener energy needs more nuance, pointing to the lack of debate among politicians and environmentalists over how much it will cost consumers.

“We have to face the reality that there is something wrong in the political debate,” said Pouyanné. “People think it’s renewable so it should be free.”


SOURCE: Financial Times
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I work for TOTAL. We have been moving toward sustainable energy for a few years now, with a carbon neutrality goal -- I just don't remember the year that the goal is set for. This actually isn't our first solar company acquisition..
 

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While a firm believer in renewables, the Total chief said the narrative over the shift to greener energy needs more nuance, pointing to the lack of debate among politicians and environmentalists over how much it will cost consumers.
Well it seems that Alternate Energy (of which I am a big fan and supporter) may not be as benign as it is touted to be.
This came across my news feed while I was doing my bathroom reading this morning.
https://www.inverse.com/science/why...nt-solar-farm-could-damage-the-global-climate.

In one of my recent posts I mentioned a wind farm project that was never built in my county due to resistance from nearby land owners and mostly out of state environmentalists (who's main argument was that the turbine blades killed birds that flew into them. May be some Natural Selection involved with said birds). I was on the pro-side of the project.
So there seems to be several camps among people who want renewables, those who do (and want them mandated by government and damn the cost to the average guy) and those who want them only under certain circumstances (that those damned Capitalists don't make a dime off Green Energy) and those who understand that it may take some compromise to make AE mainstream and actually generate a significant amount of power to replace a percentage of carbon based fuel.
A lot of fossil fuel companies and electrical power generation companies are going green (or at least want you to think they are).
Either they have read the writing on the wall and are hedging their bets or they are putting forth big snow jobs.
Maybe they will be using clean energy credits to offset their carbon footprints.
I'm not impressed with the Southern Company (my power provider) when it comes to small grid tied solar power systems. They talk a good talk and have some big (heavily subsidized and investor owned) solar farms on line in Alabama. But as a small provider you literally have to pay them to sell your power to them.
 
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Well it seems that Alternate Energy (of which I am a big fan and supporter) may not be as benign as it is touted to be.
This came across my news feed while I was doing my bathroom reading this morning.
https://www.inverse.com/science/why...nt-solar-farm-could-damage-the-global-climate.
I'd say that's fearmongering at its best...... the carbon reduction through using less fossil fuel is still better than the little extra heat by dark panels in the desert.....of course assuming they use solar panels vs a focused mirrored solar array to boil water which makes waaaaaaaay more sense in the deserts... .so yeah a BS article.
 

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I work for TOTAL. We have been moving toward sustainable energy for a few years now, with a carbon neutrality goal -- I just don't remember the year that the goal is set for. This actually isn't our first solar company acquisition..
keep going
 


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Maybe if Total built solar projects instead of buying existing ones there wouldn't be a 'bubble'.

-Crissa
SunPower isn’t a project; they make solar panels (my panels are SunPower panels), and companies buy companies. But companies do contribute to bubbles when they buy up stock or draw attention to their company purchases. I don’t blame Total for trying to stay alive in the future when there is no more oil.

I was confused by the quote about us thinking that renewable energy should be free. If I am the one paying for the infrastructure (I.e., my panels, my inverter, my labor to install), then I should reap the benefits of that ‘free’ energy to offset my costs. If they do it then they should be able to make a profit.
 

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SunPower isn’t a project...
I'm commenting about the articles. In the second article, they're whining about a bubble. In the first article they're buying fields of solar panels.

Even buying SunPower is not building solar panels, it's buying the capacity to build solar panels.

-Crissa
 

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Maybe if Total built solar projects instead of buying existing ones there wouldn't be a 'bubble'.

-Crissa
Like Tesla buying a battery company and Apple buying a software company, the purpose of the aquisition is the technology and engineers.
 


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Like Tesla buying a battery company and Apple buying a software company, the purpose of the aquisition is the technology and engineers.
Tesla didn't buy LG Chem, they built a factory with LG Chem. Tesla didn't buy any existing, operating facilities and then complain that the price of existing facilities went up - they made new ones.

-Crissa
 

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I'd say that's fearmongering at its best...... the carbon reduction through using less fossil fuel is still better than the little extra heat by dark panels in the desert.....of course assuming they use solar panels vs a focused mirrored solar array to boil water which makes waaaaaaaay more sense in the deserts... .so yeah a BS article.
What I got from the article was that if you built massive solar arrays (covered the Sahara desert) then the amount of heat being put into the atmosphere would, at some point in time, equal or surpass the amount of heat being put into the atmosphere by carbon based fuels. This was attributed to the fact the panels are black and would create a lot more heat than what is normally reflected off the lighter desert terrain.

I used this as an example of how you can't make everybody happy no matter what course of action you take.

On one hand you have environmentalists that want large scale wind power and then you have the tree huggers that say that the turbines kill birds and upset wind patterns.

You have environmentalists that want super large scale solar power farms and along comes another group that says that eventually the heat generated by these large scale farms will not help Global Warming.

Once these groups become entrenched in their positions it is almost impossible to get them to compromise with other groups.

Kind of like politics isn't it?

I guess it is possible that the source of this article is a shill for the fossil fuel industry. Maybe I should have done a little more digging but I had to do some real work outside.
 

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Tesla didn't buy LG Chem, they built a factory with LG Chem. Tesla didn't buy any existing, operating facilities and then complain that the price of existing facilities went up - they made new ones.

-Crissa

Tesla bought Maxwell
 

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They didn't have any battery factories.

-Crissa.

Go back and read my post. Technology and engineers are what you buy when you buy a company.
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