Total moves into wind – but Maersk deal still key

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Ilaria Valtimora
October 9, 2017
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Total moves into wind – but Maersk deal still key

Falling oil prices and global climate action have forced more oil companies to look at investments in renewables over the last decade. For the wind sector, this has meant new players coming in for a piece of the action, such as Engie, Statoil and Shell.

Last month, another oil company joined them. French oil giant Total acquired a 23% interest in wind and solar company Eren Renewable Energy for €238m. French developer Eren owns a portfolio of 650MW of operating or under construction renewable energy assets, including around 120MW of onshore wind farms, and it plans to achieve 3GW of installed renewable energy capacity by 2023. Under the agreement, Total would have the option to take over Eren after five years.

This buyout is part of Total’s wider renewables investment strategy, which started in 2011, when it invested $1.4bn in a 60% stake of US solar firm SunPower. At that time oil prices averaged $120 a barrel, and Total said it saw renewables as a useful hedge.

Following that, Total also focused on energy efficiency and battery storage systems. In 2015, it invested $12m in a Silicon-Valley start-up that manufactures batteries, and last year it acquired French battery maker Saft for $1bn. Last month, it bought GreenFlex, a French company specialised in energy efficiency.

The acquired companies have been integrated into Total’s gas, renewables and power segment, which was created last year, while this year the utility has set up Total Solar to develop large solar power plants as well as solar systems for industrial and commercial use.

Total already has some experience in the wind sector. Last year it invested in United Wind, which leases small wind turbines to businesses and homes in the US, but the Eren deal is the first time it has expressed an interest in large wind solutions.

That does not mean we expect it go big on wind, though.

For one thing, its renewable energy targets remain cautious. In 2015, the company announced its intention to invest up to $500m in renewables annually, with the aim to raise the share of green energy source in its portfolio up to 20% by 2035. Its core business remains oil, and its biggest recent deal was a $7.5bn buyout of Maersk Oil & Gas. That overshadows any of its green deals.

But it might come under pressure to do more, and do it quickly. Many oil giants have been facing pressure from shareholders to do more about climate change and invest in renewables. For example, this year 62% of ExxonMobil shareholders voted to be more open about the impact of climate change on its business. This is a clear signal that sentiment of oil's backers has been changing.

In addition, a recent report from UK oil giant BP forecast that renewables would be the fastest-growing fuel sources in coming years, at 7.6% annually, compared to only 0.7% for oil. The risk for oil companies that delay diversification is they will be left behind.

There are a couple of reasons to believe that Total is setting a solid base for wind.

First, it has entered utility-scale wind through a company buyout, which should give it the in-house resources and expertise to develop its own projects. This is already happening with the creation of Total Solar, and we might see in future a Total Wind arm that covers both larger and distributed schemes.

Second, the acquisition of Eren shows that Total sees a benefit in diversifying, so it is not just focused on solar. It has the financial clout to get involved in offshore wind too – and its Maersk acquisition has bolstered its expertise in shipping – but it will also find it tough to grow offshore in the face of strong competition from players that have, in some cases, over a decade’s experience. It is not an easy play.

Last week we saw Dong Energy change its name to reflect its green shift, but we do not expect anything similar from Total soon. Its Maersk Oil & Gas buyout shows where its priorities remain.

Falling oil prices and global climate action have forced more oil companies to look at investments in renewables over the last decade. For the wind sector, this has meant new players coming in for a piece of the action, such as Engie, Statoil and Shell.

Last month, another oil company joined them. French oil giant Total acquired a 23% interest in wind and solar company Eren Renewable Energy for €238m. French developer Eren owns a portfolio of 650MW of operating or under construction renewable energy assets, including around 120MW of onshore wind farms, and it plans to achieve 3GW of installed renewable energy capacity by 2023. Under the agreement, Total would have the option to take over Eren after five years.

This buyout is part of Total’s wider renewables investment strategy, which started in 2011, when it invested $1.4bn in a 60% stake of US solar firm SunPower. At that time oil prices averaged $120 a barrel, and Total said it saw renewables as a useful hedge.

Following that, Total also focused on energy efficiency and battery storage systems. In 2015, it invested $12m in a Silicon-Valley start-up that manufactures batteries, and last year it acquired French battery maker Saft for $1bn. Last month, it bought GreenFlex, a French company specialised in energy efficiency.

The acquired companies have been integrated into Total’s gas, renewables and power segment, which was created last year, while this year the utility has set up Total Solar to develop large solar power plants as well as solar systems for industrial and commercial use.

Total already has some experience in the wind sector. Last year it invested in United Wind, which leases small wind turbines to businesses and homes in the US, but the Eren deal is the first time it has expressed an interest in large wind solutions.

That does not mean we expect it go big on wind, though.

For one thing, its renewable energy targets remain cautious. In 2015, the company announced its intention to invest up to $500m in renewables annually, with the aim to raise the share of green energy source in its portfolio up to 20% by 2035. Its core business remains oil, and its biggest recent deal was a $7.5bn buyout of Maersk Oil & Gas. That overshadows any of its green deals.

But it might come under pressure to do more, and do it quickly. Many oil giants have been facing pressure from shareholders to do more about climate change and invest in renewables. For example, this year 62% of ExxonMobil shareholders voted to be more open about the impact of climate change on its business. This is a clear signal that sentiment of oil's backers has been changing.

In addition, a recent report from UK oil giant BP forecast that renewables would be the fastest-growing fuel sources in coming years, at 7.6% annually, compared to only 0.7% for oil. The risk for oil companies that delay diversification is they will be left behind.

There are a couple of reasons to believe that Total is setting a solid base for wind.

First, it has entered utility-scale wind through a company buyout, which should give it the in-house resources and expertise to develop its own projects. This is already happening with the creation of Total Solar, and we might see in future a Total Wind arm that covers both larger and distributed schemes.

Second, the acquisition of Eren shows that Total sees a benefit in diversifying, so it is not just focused on solar. It has the financial clout to get involved in offshore wind too – and its Maersk acquisition has bolstered its expertise in shipping – but it will also find it tough to grow offshore in the face of strong competition from players that have, in some cases, over a decade’s experience. It is not an easy play.

Last week we saw Dong Energy change its name to reflect its green shift, but we do not expect anything similar from Total soon. Its Maersk Oil & Gas buyout shows where its priorities remain.

Falling oil prices and global climate action have forced more oil companies to look at investments in renewables over the last decade. For the wind sector, this has meant new players coming in for a piece of the action, such as Engie, Statoil and Shell.

Last month, another oil company joined them. French oil giant Total acquired a 23% interest in wind and solar company Eren Renewable Energy for €238m. French developer Eren owns a portfolio of 650MW of operating or under construction renewable energy assets, including around 120MW of onshore wind farms, and it plans to achieve 3GW of installed renewable energy capacity by 2023. Under the agreement, Total would have the option to take over Eren after five years.

This buyout is part of Total’s wider renewables investment strategy, which started in 2011, when it invested $1.4bn in a 60% stake of US solar firm SunPower. At that time oil prices averaged $120 a barrel, and Total said it saw renewables as a useful hedge.

Following that, Total also focused on energy efficiency and battery storage systems. In 2015, it invested $12m in a Silicon-Valley start-up that manufactures batteries, and last year it acquired French battery maker Saft for $1bn. Last month, it bought GreenFlex, a French company specialised in energy efficiency.

The acquired companies have been integrated into Total’s gas, renewables and power segment, which was created last year, while this year the utility has set up Total Solar to develop large solar power plants as well as solar systems for industrial and commercial use.

Total already has some experience in the wind sector. Last year it invested in United Wind, which leases small wind turbines to businesses and homes in the US, but the Eren deal is the first time it has expressed an interest in large wind solutions.

That does not mean we expect it go big on wind, though.

For one thing, its renewable energy targets remain cautious. In 2015, the company announced its intention to invest up to $500m in renewables annually, with the aim to raise the share of green energy source in its portfolio up to 20% by 2035. Its core business remains oil, and its biggest recent deal was a $7.5bn buyout of Maersk Oil & Gas. That overshadows any of its green deals.

But it might come under pressure to do more, and do it quickly. Many oil giants have been facing pressure from shareholders to do more about climate change and invest in renewables. For example, this year 62% of ExxonMobil shareholders voted to be more open about the impact of climate change on its business. This is a clear signal that sentiment of oil's backers has been changing.

In addition, a recent report from UK oil giant BP forecast that renewables would be the fastest-growing fuel sources in coming years, at 7.6% annually, compared to only 0.7% for oil. The risk for oil companies that delay diversification is they will be left behind.

There are a couple of reasons to believe that Total is setting a solid base for wind.

First, it has entered utility-scale wind through a company buyout, which should give it the in-house resources and expertise to develop its own projects. This is already happening with the creation of Total Solar, and we might see in future a Total Wind arm that covers both larger and distributed schemes.

Second, the acquisition of Eren shows that Total sees a benefit in diversifying, so it is not just focused on solar. It has the financial clout to get involved in offshore wind too – and its Maersk acquisition has bolstered its expertise in shipping – but it will also find it tough to grow offshore in the face of strong competition from players that have, in some cases, over a decade’s experience. It is not an easy play.

Last week we saw Dong Energy change its name to reflect its green shift, but we do not expect anything similar from Total soon. Its Maersk Oil & Gas buyout shows where its priorities remain.

Falling oil prices and global climate action have forced more oil companies to look at investments in renewables over the last decade. For the wind sector, this has meant new players coming in for a piece of the action, such as Engie, Statoil and Shell.

Last month, another oil company joined them. French oil giant Total acquired a 23% interest in wind and solar company Eren Renewable Energy for €238m. French developer Eren owns a portfolio of 650MW of operating or under construction renewable energy assets, including around 120MW of onshore wind farms, and it plans to achieve 3GW of installed renewable energy capacity by 2023. Under the agreement, Total would have the option to take over Eren after five years.

This buyout is part of Total’s wider renewables investment strategy, which started in 2011, when it invested $1.4bn in a 60% stake of US solar firm SunPower. At that time oil prices averaged $120 a barrel, and Total said it saw renewables as a useful hedge.

Following that, Total also focused on energy efficiency and battery storage systems. In 2015, it invested $12m in a Silicon-Valley start-up that manufactures batteries, and last year it acquired French battery maker Saft for $1bn. Last month, it bought GreenFlex, a French company specialised in energy efficiency.

The acquired companies have been integrated into Total’s gas, renewables and power segment, which was created last year, while this year the utility has set up Total Solar to develop large solar power plants as well as solar systems for industrial and commercial use.

Total already has some experience in the wind sector. Last year it invested in United Wind, which leases small wind turbines to businesses and homes in the US, but the Eren deal is the first time it has expressed an interest in large wind solutions.

That does not mean we expect it go big on wind, though.

For one thing, its renewable energy targets remain cautious. In 2015, the company announced its intention to invest up to $500m in renewables annually, with the aim to raise the share of green energy source in its portfolio up to 20% by 2035. Its core business remains oil, and its biggest recent deal was a $7.5bn buyout of Maersk Oil & Gas. That overshadows any of its green deals.

But it might come under pressure to do more, and do it quickly. Many oil giants have been facing pressure from shareholders to do more about climate change and invest in renewables. For example, this year 62% of ExxonMobil shareholders voted to be more open about the impact of climate change on its business. This is a clear signal that sentiment of oil's backers has been changing.

In addition, a recent report from UK oil giant BP forecast that renewables would be the fastest-growing fuel sources in coming years, at 7.6% annually, compared to only 0.7% for oil. The risk for oil companies that delay diversification is they will be left behind.

There are a couple of reasons to believe that Total is setting a solid base for wind.

First, it has entered utility-scale wind through a company buyout, which should give it the in-house resources and expertise to develop its own projects. This is already happening with the creation of Total Solar, and we might see in future a Total Wind arm that covers both larger and distributed schemes.

Second, the acquisition of Eren shows that Total sees a benefit in diversifying, so it is not just focused on solar. It has the financial clout to get involved in offshore wind too – and its Maersk acquisition has bolstered its expertise in shipping – but it will also find it tough to grow offshore in the face of strong competition from players that have, in some cases, over a decade’s experience. It is not an easy play.

Last week we saw Dong Energy change its name to reflect its green shift, but we do not expect anything similar from Total soon. Its Maersk Oil & Gas buyout shows where its priorities remain.

Falling oil prices and global climate action have forced more oil companies to look at investments in renewables over the last decade. For the wind sector, this has meant new players coming in for a piece of the action, such as Engie, Statoil and Shell.

Last month, another oil company joined them. French oil giant Total acquired a 23% interest in wind and solar company Eren Renewable Energy for €238m. French developer Eren owns a portfolio of 650MW of operating or under construction renewable energy assets, including around 120MW of onshore wind farms, and it plans to achieve 3GW of installed renewable energy capacity by 2023. Under the agreement, Total would have the option to take over Eren after five years.

This buyout is part of Total’s wider renewables investment strategy, which started in 2011, when it invested $1.4bn in a 60% stake of US solar firm SunPower. At that time oil prices averaged $120 a barrel, and Total said it saw renewables as a useful hedge.

Following that, Total also focused on energy efficiency and battery storage systems. In 2015, it invested $12m in a Silicon-Valley start-up that manufactures batteries, and last year it acquired French battery maker Saft for $1bn. Last month, it bought GreenFlex, a French company specialised in energy efficiency.

The acquired companies have been integrated into Total’s gas, renewables and power segment, which was created last year, while this year the utility has set up Total Solar to develop large solar power plants as well as solar systems for industrial and commercial use.

Total already has some experience in the wind sector. Last year it invested in United Wind, which leases small wind turbines to businesses and homes in the US, but the Eren deal is the first time it has expressed an interest in large wind solutions.

That does not mean we expect it go big on wind, though.

For one thing, its renewable energy targets remain cautious. In 2015, the company announced its intention to invest up to $500m in renewables annually, with the aim to raise the share of green energy source in its portfolio up to 20% by 2035. Its core business remains oil, and its biggest recent deal was a $7.5bn buyout of Maersk Oil & Gas. That overshadows any of its green deals.

But it might come under pressure to do more, and do it quickly. Many oil giants have been facing pressure from shareholders to do more about climate change and invest in renewables. For example, this year 62% of ExxonMobil shareholders voted to be more open about the impact of climate change on its business. This is a clear signal that sentiment of oil's backers has been changing.

In addition, a recent report from UK oil giant BP forecast that renewables would be the fastest-growing fuel sources in coming years, at 7.6% annually, compared to only 0.7% for oil. The risk for oil companies that delay diversification is they will be left behind.

There are a couple of reasons to believe that Total is setting a solid base for wind.

First, it has entered utility-scale wind through a company buyout, which should give it the in-house resources and expertise to develop its own projects. This is already happening with the creation of Total Solar, and we might see in future a Total Wind arm that covers both larger and distributed schemes.

Second, the acquisition of Eren shows that Total sees a benefit in diversifying, so it is not just focused on solar. It has the financial clout to get involved in offshore wind too – and its Maersk acquisition has bolstered its expertise in shipping – but it will also find it tough to grow offshore in the face of strong competition from players that have, in some cases, over a decade’s experience. It is not an easy play.

Last week we saw Dong Energy change its name to reflect its green shift, but we do not expect anything similar from Total soon. Its Maersk Oil & Gas buyout shows where its priorities remain.

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Become a member of the 6,500-strong A Word About Wind community today, and gain access to our premium content, exclusive lead generation and investment opportunities.