French player Total has raised its renewable energy target to 35 gigawatts by 2025 under its decade-long strategy released on Wednesday, which focuses on greener gas and electricity.
The new 2025 goal for gross capacity developed adds 10GW to the previous 25GW ambition, which chief executive Patrick Pouyanne said had already been underwritten in Total’s wind and solar pipeline after a spree of acquisitions in 2020.
“We have raised the bar,” Pouyanne said, adding that Total aims to be producing about 30 terawatt hours net of renewable electricity by the middle of the decade.
Investments in renewables to double
Total expects to be devoting 20% of its capital expenditure, or about $3 billion of the total, to renewable power by the end of the decade. This compares to around 10% today, with capex expected to increase to 15% by 2025.
“Investments in renewables will double, while we maintain our spending in liquefied natural gas, and slowly decrease oil and gas spending, although this will still be the largest share of the total by 2030,” Pouyanne said.
Total’s energy production in the next decade will grow by one third — from approximately 3 million to 4 million barrels of oil equivalent per day — with half of the total coming from LNG, and half from electricity, mainly renewables.
According to Pouyanne, the “capital-light model” Total applies to renewables is a great fit because it offers “predictable cash flow” unlike its oil business, which is “more volatile”.
Total said on Tuesday it expects oil to peak by 2030, but gas not before 2040.
Pouyanne said the increased target for renewables reflects Total’s ambition to be one of the five biggest producers of renewable power globally.
“We are among the top five in oil and gas [and want] to reach the same level in renewables,” he said, adding that Total could continue to add 10GW gross of new project capacity annually as it has done in 2020.
The company expects its 2025 developed portfolio to include 15GW of gross development in Europe, 6GW in the Americas, split evenly between North and South, 6GW in India and 3GW in China.
Pouyanne said renewables projects in sectors such as solar and offshore wind have the ability to add “long term value” to Total and insisted they could deliver attractive, albeit lower, returns when compared to the rest of the company’s oil and gas-focused operations.
“We will continue growing our oil and gas business because those returns allow us to finance the growth of our renewables ambitions…Our oil and gas businesses will fund the transition even at $40 per barrel [of Brent crude] for profitable growth in renewables and electricity while supporting the dividend at the same time,” Pouyanne said.
Total has already set a blistering pace with deals in both wind and solar this year.
In solar it has taken positions in 8GW of projects across Spain, the Middle East and India, including a 3GW-plus Spanish foray last week that will allow it to decarbonise power supplies to its entire European operations.
In wind, the French group made dramatic entries to the offshore sector, buying a majority stake in the 1.1GW Seagreen 1 from utility SSE and ensuring a fast-track route into fixed-foundation development.
It also staked a claim in the emerging floating wind industry, with stakes in a UK project and most notably a link-up with Macquarie for a planned 2GW of development off South Korea.
(Upstream's renewable energy sister publication Recharge contributed to this article.)