TotalEnergies Stepping Up Renewables Spending In 2023

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TotalEnergies SE has made renewables a cornerstone of its net zero strategy, though a recently signed oil and gas deal in Iraq worth a reported $27 billion could potentially check its progress in curbing emissions.

The French energy giant aims to hike renewables capacity tenfold this decade from 10 gigawatts (GW) in 2021 to 100 GW by 2030, as Evaluate Energy data shows.

Last year, it grew installed capacity by seven GW, to reach a total of 17 GW by the end of 2022, with a focus predominantly on wind and solar power (see chart above).

That includes acquiring 50 per cent of Clearway Energy in the U.S., one of the country’s leading renewable energy groups. The transaction also gives TotalEnergies a U.S. development pipeline portfolio of more than 25 GW — this will underpin its goal of generating at least 25 per cent of its 2030 global target of 100 GW from the U.S.

The Americas overall represents the second-largest region globally in terms of currently installed renewables capacity, after Asia, with a broadly even split of wind and photovoltaic energy projects.

Keen to accelerate growth, Patrick Pouyanné, chairman and chief executive officer of TotalEnergies, is allocating $5 billion in 2023 for low carbon energy, more than its investments in new gas and oil projects.

According to the group’s Sustainability & Climate 2023 Progress Report, investments in electricity and low-carbon molecules amounted to almost $4 billion in 2022, about a quarter of the $16.3 billion in total capital expenditures.

Oil and gas

At the same time, oil and gas remains an integral part of TotalEnergies’ global business, even though new projects are increasingly intertwined with parallel low-carbon ventures.

In Iraq, its long-delayed energy deal encompasses various oil, gas and renewables projects with an overarching goal to improve the Middle East nation’s electricity supply.

Working with QatarEnergy and the local Basrah Gas Company, this includes plans to recover flared gas from three oil fields to supply local power plants, as well as plans to build a seawater treatment plant for water injection to increase oil production.

In addition, TotalEnergies will develop a one-GW solar plant to supply electricity to the Basrah regional grid, working alongside Saudi Arabian company ACWA Power.

The company signed a similarly broad energy agreement in Algeria this month with state-owned Sonatrach to extend its gas partnership and to collaborate on renewables.

This includes raising output at the Tin Fouyé Tabankort fields, securing LNG deliveries, and exploring projects to harness solar power for oil and gas installations, and studying the potential for renewable, low-carbon hydrogen for the export market.

LNG is set to remain a key component of the group’s global portfolio.

On July 13, TotalEnergies and its partners announced the final investment decision for Phase 1 of the Rio Grande LNG project in South Texas.

The $14.8-billion first phase comprises three liquefaction trains with a total capacity of 17.5 million tons per annum (Mtpa), with Bechtel handed the engineering, procurement and construction work.

The plant is scheduled to come onstream in 2027, with TotalEnergies signed up to offtake 5.4 Mtpa of LNG from the first phase over a period of 20 years.

Road to net zero

Announcing the Rio Grande launch, Pouyanné said LNG from the first phase of the project will boost the company’s U.S. LNG export capacity to over 15 Mtpa by 2030.

He also called it a boost for European gas security, and to provide customers in Asia with an alternative form of energy with half the emissions as coal.

TotalEnergies’ ambition is to increase the share of gas in its sales mix to close to 50 per cent by 2030, as part of efforts to cut emissions and to help partners in the transition from coal to natural gas.

However, this is expected to fall back during the 2030 to 2050 period.

Last year, TotalEnergies published an outline of what its business might look like as it transitions to a carbon-neutral company through to 2050.

It expects about a quarter of energy production and sales to still come from oil, gas and LNG combined by that date.

The majority, about 50 per cent of energy and sales, will be derived from low-carbon electricity, with corresponding storage capacity, totalling about 500 TWh/year, on the basis that it develops around 400 GW of renewable capacity.

It expects a further 25 per cent of its energy to come from decarbonized fuels in the form of biogas, hydrogen or synthetic liquid fuels by 2050.

The company projects combined oil and gas production of about one million boe/d by 2050 — about a quarter of the total in 2030 — primarily LNG, with very low-cost oil accounting for the rest, to be used predominantly within the petrochemicals industry.

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