TotalEnergies to cut renewables spending and assets

Oil giant TotalEnergies said it plans to invest less in renewables and sell some green energy assets as it sharpens the focus of markets for its power business.

Total will put $3-4bn net Capex annually into its Integrated Power operation, which includes renewables, the company said in its latest strategy update to investors. That compares to $5bn annually cited in the 2024 update.

The French fossil group said it will still achieve its long-standing goal of 100GW of gross power capacity for 2030, but that will now include 20GW of batteries and 'flexible' generation based around gas.

"We have adapted that, because we need more flexible assets and less renewables," said TotalEnergies CEO Patrick Pouyanne claiming the priority is to add capacity that can balance the variability of wind and solar.

"It is not a priority of the company to be a pure renewable developer... we are not a renewable developer," said the Total chief.

Pouyanne said the company is sharpening its focus on markets where it can hit its target of 12% return on average capital employed for projects.

The group said it will now make three “key deregulated markets” the focus of its integrated power strategy, which combines renewables, battery storage and gas, along with its energy trading clout.

They are the US, Europe and Brazil, which between them are envisaged accounting for 70% of capacity and generation.

In the US it cited industrial and data centre demand, and a buoyant market for power purchase agreements as a fit with its integrated strategy.

An electrifying and renewables-heavy Europe offers Total the chance to capitalise on the price variability plaguing the market, the company reckons, while in Brazil it is in pole position due to its partnership with local player Casa dos Ventos and "the best hydro and wind in the world".

Total said it will remain in some other renewables markets where it can see a path to profitable growth without the integrated model, citing India and South Africa as examples.

“We want to divest all the other countries,” said Total’s president of gas, renewables and power Stephane Michel.

The oil giant has faced concerns from investors over rising debt levels and lower oil prices, and said today it will launch a push to save $7.5bn through Capex reductions and cost cuts.

With its 100GW 2030 renewable energy goal set in 2021, TotalEnergies was arguably the most ambitious of the oil giants in terms of renewable investments, with a big push into offshore wind and solar.

Other European oil majors such as BP and Shell have trimmed back their own green energy ambitions over the last two years in the face of investor concerns over the returns on offer.