TotalEnergies SE TTE announced that it has signed another renewable Corporate Power Purchase Agreement (“CPPA”) with LyondellBasell to supply a combined 275 MWac (358 MW) of clean electricity sourced from its utility-scale Cottonwood Bayou and Brazoria Solar farms in Texas.
This is a second CPPA between TotalEnergies and LyondellBasell. Per the latest CPPA, LyondellBasell will offtake 125 MWac (163 MW) from TotalEnergies’ Brazoria Solar farm, located at southwest Houston. Per the old CPPA signed in 2022, LyondellBasell will offtake 150 MWac (195 MW) from TotalEnergies’ Cottonwood Bayou Solar plant, a project located at south of Houston.
The two CPPAs are indexed on merchant prices through an upside-sharing mechanism, under which the companies share any potential upside arising from increased market price over the contract term.
TotalEnergies has already signed CPPA with Amazon AMZN and Saint-Gobain in the United States, which clearly shows the ability of the company to provide reliable, clean electricity to its customers. In the United States, TotalEnergies’ portfolio of large-scale solar, storage, onsite B2B solar distributed generation, onshore and offshore wind projects are expected to generate up to 10 gigawatts (“GWs”) of renewable power by 2025 and more than 25 GWs by 2030.
TotalEnergies Long-term Goal
TotalEnergies has an ambition to become net zero by 2050. To achieve this target, it is adding more clean projects to its portfolio. TTE has already decided its long-term renewable energy goal of generating more than 100 terawatt hours of clean energy by 2030. The company has been increasing its renewable energy portfolio through acquisitions, partnerships and organic methods.
TTE is making substantial investments each year in its renewable business to expand operations globally. This hybrid renewable energy will assist the company in meeting its long-term renewable goal. The oil and gas major is gradually building a portfolio of low-carbon businesses that could account for 15-20% of its sales by 2040.
Renewable Energy is Gaining Traction
A clear transition is evident in the energy space, with more companies trying to utilize renewable sources of energy to produce clean energy and meet customers’ electricity demand and lower emissions. The growth prospect in the renewable energy space is massive, as depicted by a research report from Precedence Research, which shows the global renewable energy market is expected to hit over $2,182.99 billion by 2032 from $970 billion in 2022.
Undoubtedly, the significant growth prospects will attract operators from the energy space, thus along with TTE, other oil and gas companies like BP plc BP and ExxonMobil Corporation XOM are also focused on renewable energy and adopting measures to reduce emissions from operations.
BP has set an aggressive energy transition plan to capitalize on the mounting demand for clean energy. By 2030, it plans to reduce emissions from operations by 30-35%. BP has set an ambitious goal of developing 50 GW of net renewable energy generating capacity in a decade.
ExxonMobil has been working to reduce emissions by developing more efficient fuels. The company intends to make large investments in emission-reduction projects over the next few years. XOM has developed an ambitious roadmap to achieve net-zero Scope 1 and net-zero Scope 2 GHG emissions by 2030 for unconventionally operated assets.
Price Performance
In the last three months, shares of TotalEnergies have risen 3.8% compared with the industry’s 0.4% growth.
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Zacks Rank
TotalEnergies currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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