Germany: TotalEnergies Acquires Kyon Energy, a Leading German Battery Storage Developer

Rhea-AI Summary

TotalEnergies (TTE) has signed an agreement to acquire Kyon Energy, a leading developer of battery storage systems in Germany, for €90 million upfront payment. Kyon Energy has developed 770 MW of projects, with 120 MW in operation, 350 MW under construction, and 300 MW ready to build. TotalEnergies aims to develop, build, and operate these projects, contributing to its integrated power strategy. The acquisition strengthens TotalEnergies' presence in the German electricity market, following 2023 successes, and supports its profitability target for the business segment. TotalEnergies is also expanding its renewable electricity generation capacity to reach 35 GW in 2025 and more than 100 TWh of net electricity production by 2030.

Insights

Energy Market Analyst

The acquisition of Kyon Energy by TotalEnergies marks a strategic expansion in the German energy sector, particularly in the realm of battery storage systems. It is reflective of a broader industry trend where major energy companies are diversifying their portfolios to include renewable energy assets and technologies that enhance grid stability and energy storage capabilities.

From an energy market perspective, the move is significant for several reasons. Firstly, it indicates TotalEnergies' commitment to strengthening its position in the largest electricity market in Europe. Secondly, the integration of Kyon Energy's battery storage solutions can be seen as a hedge against the volatility of renewable energy sources, providing more predictable and reliable energy supply. Moreover, the acquisition aligns with Germany's Energiewende, the country's ambitious energy transition policy, which necessitates substantial investment in energy storage to mitigate the intermittent nature of renewable energy sources.

It is important to note that battery storage systems are critical for managing peak demand and providing ancillary services to the power grid. The upfront investment of €90 million, plus additional earn-out payments, suggests confidence in the profitability and strategic value of Kyon Energy's existing and pipeline projects. The projected 12% ROACE (Return on Average Capital Employed) by 2028 for this business segment is an aggressive target, indicating TotalEnergies' positive outlook on the financial performance of its integrated power activities.

Financial Analyst

From a financial standpoint, TotalEnergies' acquisition of Kyon Energy is an investment that could potentially enhance shareholder value through diversification and growth in the renewable energy sector. The €90 million upfront payment, with additional performance-based earn-out payments, reflects a structured deal that aligns the interests of both parties and ties future payments to the successful development of the projects.

Investors should consider the potential impact of this acquisition on TotalEnergies' financials. The inclusion of 770 MW of developed projects and a 2 GW pipeline could lead to increased revenue streams from the sale of stored electricity and grid services. Furthermore, the investment in battery storage systems could lead to operational synergies with TotalEnergies' existing renewable energy assets, potentially improving the overall efficiency and profitability of the company's power segment.

However, it is crucial to monitor how the integration of Kyon Energy will unfold, as the success of such acquisitions often hinges on the seamless assimilation of new assets and teams. Additionally, the long-term success will depend on regulatory support, technological advancements in storage solutions and the evolution of energy markets.

Renewable Energy Policy Expert

The strategic acquisition of Kyon Energy by TotalEnergies has implications beyond the business realm; it plays into the broader context of energy policy and the transition towards sustainable energy systems. Germany's aggressive renewable energy targets and its move away from nuclear and fossil fuels have created a demand for technologies that can bridge the gap between renewable energy generation and consumption.

Battery storage systems like those developed by Kyon Energy are pivotal in this transition. They enable the storage of excess energy generated from renewable sources, such as solar and wind, to be used when demand is high or generation is low. This capability is essential for maintaining grid stability and ensuring a consistent energy supply.

Policy frameworks at both the national and European Union levels are likely to continue supporting the growth of the energy storage market, which in turn can create a favorable environment for TotalEnergies' new acquisition. In the long run, the success of such ventures could influence energy policy by demonstrating the viability and importance of energy storage in a modern grid system, potentially leading to more supportive regulations and incentives.

PARIS--(BUSINESS WIRE)-- Regulatory News:

As part of its development as an integrated power player in Germany, TotalEnergies (Paris:TTE) (LSE:TTE) (NYSE:TTE) has signed an agreement to acquire from its three founders the entire share capital of Kyon Energy, one of the leading developers of battery storage systems in the country. The consideration consists of a €90 million upfront payment, plus some earn out payments linked to the achievement of development targets.

Since its creation in 2021, Kyon Energy has developed 770 MW of projects with very competitive connection costs of which 120 MW are already in operation, 350 MW are under construction and 300 MW are ready to build. In addition, Kyon Energy’s portfolio includes a 2 GW pipeline of advanced-stage projects.

Thanks to the expertise of Kyon Energy’s management and employees, TotalEnergies will develop, build, and operate those projects, mainly located in the North of Germany, as part of its integrated power strategy. This new acquisition follows 2023 successes in the country – including the award of a maritime concession to develop a 3 GW offshore wind farm, the acquisition of the renewable energy aggregator Quadra Energy and the award of a contract to install and operate 1,100 high-power charge points for electric vehicles – and is further strengthening TotalEnergies ability to offer reliable and competitive power to its German customers.

The battery storage system will contribute to the resilience of the German electricity system, help solving congestion problems or providing additional flexibility to the German power grid, and ultimately support the rapid expansion of renewable energies in Germany

"I would like to welcome the Kyon Energy teams to TotalEnergies. The acquisition of this company, one of the leaders in its market, is a key element in our presence in the German electricity market, which is the largest in Europe,” said Stéphane Michel, President Gas, Renewables & Power at TotalEnergies. "This acquisition will enable us to accelerate the development of our Integrated Power activities in Germany, both in production, trading, aggregation and marketing of low-carbon electricity available 24 hours a day. It also contributes to our profitability target for this business segment of 12% ROACE by 2028."

"This partnership with TotalEnergies represents a key moment for Kyon Energy, as we aim to become one of Europe's leading flexibility providers. By joining forces, we are consolidating our position in the German electricity market, and thus making a direct contribution to its transition to a more sustainable system", said Adrian Kapsalis, CEO of Kyon Energy.

The acquisition remains subject to authorization by the relevant authorities.

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TotalEnergies and electricity
As part of its ambition to get to net zero by 2050, TotalEnergies is building a world class cost-competitive portfolio combining renewables (solar, onshore and offshore wind) and flexible assets (CCGT, storage) to deliver clean firm power to its customers. At the end of 2023, TotalEnergies’ gross renewable electricity generation installed capacity was 22 GW. TotalEnergies will continue to expand this business to reach 35 GW in 2025 and more than 100 TWh of net electricity production by 2030.

About TotalEnergies
TotalEnergies is a global multi-energy company that produces and markets energies: oil and biofuels, natural gas and green gases, renewables and electricity. Our more than 100,000 employees are committed to energy that is ever more affordable, cleaner, more reliable and accessible to as many people as possible. Active in nearly 130 countries, TotalEnergies puts sustainable development in all its dimensions at the heart of its projects and operations to contribute to the well-being of people.

@TotalEnergies - TotalEnergies - TotalEnergies - TotalEnergies

Cautionary Note
The terms “TotalEnergies”, “TotalEnergies company” or “Company” in this document are used to designate TotalEnergies SE and the consolidated entities that are directly or indirectly controlled by TotalEnergies SE. Likewise, the words “we”, “us” and “our” may also be used to refer to these entities or to their employees. The entities in which TotalEnergies SE directly or indirectly owns a shareholding are separate legal entities. This document may contain forward-looking information and statements that are based on a number of economic data and assumptions made in a given economic, competitive and regulatory environment. They may prove to be inaccurate in the future and are subject to a number of risk factors. Neither TotalEnergies SE nor any of its subsidiaries assumes any obligation to update publicly any forward-looking information or statement, objectives or trends contained in this document whether as a result of new information, future events or otherwise. Information concerning risk factors, that may affect TotalEnergies’ financial results or activities is provided in the most recent Universal Registration Document, the French-language version of which is filed by TotalEnergies SE with the French securities regulator Autorité des Marchés Financiers (AMF), and in the Form 20-F filed with the United States Securities and Exchange Commission (SEC).

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TotalEnergies

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Source: TOTALENERGIES SE

FAQ

What is the acquisition amount for Kyon Energy by TotalEnergies?

TotalEnergies is set to acquire Kyon Energy for a €90 million upfront payment, plus earn out payments linked to the achievement of development targets.

What is the total developed capacity of Kyon Energy's projects?

Kyon Energy has developed 770 MW of projects, with 120 MW in operation, 350 MW under construction, and 300 MW ready to build.

What are the plans for TotalEnergies regarding the acquired projects from Kyon Energy?

TotalEnergies aims to develop, build, and operate the projects acquired from Kyon Energy, contributing to its integrated power strategy in Germany.

How is the acquisition strengthening TotalEnergies' presence in the German electricity market?

The acquisition of Kyon Energy strengthens TotalEnergies' presence in the German electricity market, following 2023 successes, and supports its profitability target for the business segment.

What is TotalEnergies' plan for expanding its renewable electricity generation capacity?

TotalEnergies plans to expand its renewable electricity generation capacity to reach 35 GW in 2025 and more than 100 TWh of net electricity production by 2030.