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Integrated Power: TotalEnergies Acquires a Gas-Fired Power Plant in the United Kingdom

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TotalEnergies (TTE) has acquired West Burton Energy's gas-fired power plant in Nottinghamshire, UK, for £450 million. The plant, West Burton B, includes three combined-cycle gas turbines totaling 1.3 GW and a 49 MW battery storage system. This acquisition aligns with TotalEnergies' strategy to integrate renewable and flexible power generation. The company aims to divest 50% of these assets, addressing its 700 MW gas power generation needs. This move boosts TotalEnergies' UK renewable capacity, now at 1.1 GW, with an additional 4.5 GW under development. The acquisition strengthens trading capabilities and supports its goal of providing affordable, sustainable energy to 300,000 UK customers. The deal is subject to regulatory approval.

Positive
  • Acquisition of West Burton Energy for £450 million strengthens TotalEnergies' power generation capacity by 1.3 GW.
  • Addition of 49 MW battery storage system enhances energy storage capabilities.
  • Supports TotalEnergies' goal of 12% ROACE by 2028 in gas, renewables, and power sector.
  • TotalEnergies now has 7 GW of worldwide flexible power generation capacity.
  • The acquisition enhances trading capabilities in the UK electricity and gas markets.
  • Improves TotalEnergies' ability to provide affordable, sustainable energy to 300,000 UK sites.
  • Leverages TotalEnergies' strong natural gas production position in the UK, operating 30% of UK Continental Shelf gas production.
Negative
  • TotalEnergies plans to divest 50% of the acquired assets, indicating potential future revenue uncertainty.
  • The acquisition is subject to regulatory approval, introducing an element of risk and potential delays.
  • Focus on gas-fired power generation might face regulatory and environmental scrutiny amidst the global shift towards greener energy.

Insights

The acquisition of West Burton B for £450 million is a significant strategic move for TotalEnergies. By adding 1.3 GW of gas-fired power generation capacity, TotalEnergies is diversifying its energy portfolio and enhancing its ability to provide stable power. This is particularly important in the context of renewable energy, which can be intermittent. Gas-fired plants, due to their flexibility, can quickly ramp up to meet demand, thus balancing out the inconsistencies inherent in renewable energy sources.

From a financial standpoint, the deal aligns with TotalEnergies' goal to achieve a 12 ROACE (Return on Average Capital Employed) by 2028. This indicates that the company anticipates a profitable return on this investment. Additionally, the decision to divest 50% of the acquired assets mitigates risk and allows TotalEnergies to redeploy capital into other strategic areas, such as its growing renewable energy projects. For investors, this indicates a balanced approach to growth and risk management.

For the energy market in the UK, this acquisition is quite meaningful. It not only highlights TotalEnergies' commitment to strengthening its presence in the region but also suggests a strategic pivot towards a hybrid energy model that combines renewable and flexible generation. The integration of a 49 MW battery storage system along with the gas-fired plant is a noteworthy point— battery storage is becoming increasingly important for grid stability.

Moreover, TotalEnergies' existing 1.1 GW Seagreen offshore wind farm and other projects under development indicate a comprehensive approach to addressing energy needs while transitioning towards greener alternatives. Retail investors should note that the flexibility provided by such acquisitions can offer a competitive edge, which could positively influence market share and customer satisfaction in the UK.

The acquisition underscores the importance of flexible power generation in today's energy landscape. While renewable energy sources such as wind and solar are critical to reducing carbon emissions, they are inherently intermittent. The addition of West Burton B, with its combined-cycle gas turbines, provides a reliable backup that can step in when renewable sources are insufficient. This ensures a stable supply of electricity to customers, which is important for maintaining consumer confidence and avoiding blackouts.

The strategic use of TotalEnergies' natural gas production in the UK to supply the plant also highlights the company's integrated approach to energy management. This could result in cost efficiencies and operational synergies, further bolstering TotalEnergies' competitive position in the market. Investors should view this as a proactive step towards a more secure and balanced energy portfolio, which can be particularly reassuring in times of energy market volatility.

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

In line with its development as an integrated electricity player, TotalEnergies (Paris:TTE) (LSE:TTE) (NYSE:TTE) has signed an agreement with EIG, an institutional investor in the global energy sector, for the acquisition of all the shares of West Burton Energy for an enterprise value of £450 million.

West Burton Energy owns and operates the West Burton B gas-fired power plant in Nottinghamshire, in England. West Burton B comprises three combined-cycle gas turbines (CCGT) with total output of 1.3 GW. Commissioned in 2013, it is one of the UK’s most advanced power plants and supplies some 1.8 million homes. A 49 MW battery storage system was added in 2018.

This acquisition rounds out TotalEnergies’ renewable power generation capacity in the UK with a flexible asset that mitigates intermittency to enable the supply of firm power to customers. Given the size of the Company’s renewable portfolio in the country, which currently stands at 1.1 GW of gross installed capacity and 4.5 GW under development, TotalEnergies assesses its need for gas-based power generation capacity at 700 MW; the Company therefore plans to divest 50% of the acquired assets.

The deal will also allow TotalEnergies to strengthen its trading capabilities in the country’s electricity and gas markets, as well as its ability to provide increasingly affordable, available and sustainable energy to its 300,000 UK electricity and gas customer sites. Finally, the Company will supply the plant by leveraging its positions in natural gas production in the country, where it operates 30% of the projects.

This brings TotalEnergies’ worldwide flexible power generation portfolio to around 7 GW of gross capacity, in addition to its 23 GW of gross renewable capacity.

“I am delighted to welcome the West Burton B team to TotalEnergies. This acquisition contributes to our integrated strategy in the UK, which combines renewable and flexible generation capacity. It complements our 1.1 GW Seagreen offshore wind farm and allows us to accelerate development of our Integrated Power activities in power generation, trading and marketing in this market,” said Stéphane Michel, President, Gas, Renewables and Power at TotalEnergies. “The deal also contributes directly to our 2028 ROACE target of around 12% in this business sector.”

The transaction is subject to authorization from the competent authorities.

***

TotalEnergies in the UK
TotalEnergies has been present in the UK for more than 60 years, employing more than 1,800 people across the energy value chain.

As one of the country’s leading oil and gas operators, the Company operates around 30% of the UK Continental Shelf’s gas production, with average daily production of 142,000 barrels of oil equivalent per day (boe/d) in 2023.

TotalEnergies’ portfolio in offshore wind in the country amounts to over 5 GW of gross renewable capacity, including Seagreen (1.1 GW, under operation), and large projects under development such as West of Orkney (2 GW) and Outer Dowsing (1.5 GW).

The Company is one of the UK’s largest suppliers of gas and electricity to businesses and the public sector, with over 300,000 customers. TotalEnergies, also offers EV charging solutions, including 2,500 charging points in London and Birmingham. The Company is also active in the distribution of petroleum products: lubricants; aviation fuel; bitumen and specialty fluids.

The Company is also present in the CCS business through its 10% interest in the Northern Endurance Partnership.

About TotalEnergies
TotalEnergies is a global integrated 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 provide as many people as possible with energy that is more reliable, more affordable and more sustainable. Active in about 120 countries, TotalEnergies places sustainability at the heart of its strategy, its projects and its operations.

@TotalEnergies l TotalEnergies l TotalEnergies l 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).

TotalEnergies Contacts

Media Relations: +33 (0)1 47 44 46 99 l presse@totalenergies.com l @TotalEnergiesPR

Investor Relations: +33 (0)1 47 44 46 46 l ir@totalenergies.com

Source: TotalEnergies SE

FAQ

What did TotalEnergies acquire in the UK?

TotalEnergies acquired West Burton Energy's gas-fired power plant in Nottinghamshire, UK, for £450 million.

How much is the total output of the West Burton B power plant?

The total output of the West Burton B power plant is 1.3 GW.

What does the acquisition of West Burton Energy include?

The acquisition includes three combined-cycle gas turbines and a 49 MW battery storage system.

What is the enterprise value of the West Burton Energy acquisition?

The enterprise value of the acquisition is £450 million.

What is the purpose of TotalEnergies' acquisition of West Burton Energy?

The acquisition aims to integrate renewable and flexible power generation, enhancing TotalEnergies' capacity to provide firm power.

How will TotalEnergies' acquisition affect its UK renewable capacity?

The acquisition boosts TotalEnergies' UK renewable capacity to 1.1 GW, with an additional 4.5 GW under development.

What percentage of the acquired assets does TotalEnergies plan to divest?

TotalEnergies plans to divest 50% of the acquired assets.

What is the impact of the acquisition on TotalEnergies' worldwide flexible power generation portfolio?

The acquisition brings TotalEnergies' worldwide flexible power generation portfolio to around 7 GW of gross capacity.

Is the TotalEnergies' acquisition of West Burton Energy finalized?

No, the acquisition is subject to authorization from competent authorities.

TotalEnergies SE

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