United States: TotalEnergies Will Supply LyondellBasell Through Two Long-Term Solar CPPAs
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Insights
Recent developments in the energy sector highlight a strategic move by TotalEnergies to bolster its renewable energy portfolio through Corporate Power Purchase Agreements (CPPAs) with LyondellBasell. This is a significant step in the transition towards clean energy, as it involves a substantial capacity of 275 MWac from solar farms in Texas. Such agreements not only secure a stable revenue stream for TotalEnergies but also facilitate LyondellBasell's decarbonization efforts.
From an industry perspective, the long-term CPPAs indexed on merchant prices with an upside-sharing mechanism are innovative, as they allow both parties to benefit from potential increases in market price. This could set a precedent for future renewable energy contracts, potentially increasing the attractiveness of CPPAs as a tool for managing energy costs and risks.
The impact on the stock market could be positive for TotalEnergies, as this deal demonstrates its commitment to growth in the renewable energy sector, which is increasingly valued by investors. For LyondellBasell, it's a step towards achieving greenhouse gas emission targets, which can improve its environmental, social and governance (ESG) ratings, potentially attracting ESG-focused investments.
The collaboration between TotalEnergies and LyondellBasell represents a tangible commitment to sustainability and could serve as a model for other companies aiming to reduce their carbon footprint. The CPPAs not only support LyondellBasell's scope 1 and 2 greenhouse gas emission reduction targets but also contribute to the broader goal of net-zero emissions by 2050 that TotalEnergies has set.
Furthermore, the acquisition of gas-fired power plants by TotalEnergies, while seemingly counterintuitive, provides flexible power production capacity. This is crucial for ensuring grid stability during the transition to renewable energy sources, which can be intermittent. The balance between renewable energy development and flexible assets is key to a reliable and sustainable energy supply.
For stakeholders, this deal underscores the importance of integrating renewable energy into corporate strategies. It could lead to increased investor confidence in companies that are proactive in managing their environmental impact, which is an essential consideration in today's market.
The strategic partnership between TotalEnergies and LyondellBasell is a clear indication of the growing trend in renewable energy investments and the shift towards long-term contracts in the industry. TotalEnergies' aim to generate up to 10 GW of renewable power by 2025 and more than 25 GW by 2030 illustrates the company's aggressive expansion plans in the renewable energy market.
This move is likely to have a ripple effect on the renewable energy sector, potentially lowering costs through economies of scale and fostering innovation in renewable technologies. Additionally, TotalEnergies' growth strategy could pressure competitors to also accelerate their renewable energy initiatives, leading to a more rapid industry-wide transition to sustainable energy sources.
For the stock market, such initiatives may enhance TotalEnergies' valuation due to the growing investor interest in renewable energy assets. As the company continues to diversify its energy mix, it may also mitigate risks associated with fossil fuel volatility, leading to a more stable financial performance over time.
After a first renewable Corporate Power Purchase Agreement (CPPA) signed at the end of 2022, TotalEnergies (Paris:TTE) (LSE:TTE) (NYSE:TTE) has signed a second contract with LyondellBasell, a global leader in the chemical industry, to supply a combined 275 MWac (358 MW) of green electricity sourced from its utility-scale Cottonwood Bayou and Brazoria Solar farms in
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Through the newly signed 15-year CPPA, LyondellBasell will offtake 125 MWac (163 MW) from TotalEnergies’ Brazoria Solar farm, located southwest of
Houston , with a capacity of 325 MW and a commercial start-up planned for end of 2025.
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Through the 12-year CPPA signed in 2022, LyondellBasell will offtake 150 MWac (195 MW) from TotalEnergies’ Cottonwood Bayou Solar plant, a project located south of
Houston , with a capacity of 455 MW and a commercial start-up planned for end of 2024.
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. They follow other CPPAs TotalEnergies signed with Amazon and Saint-Gobain in the
“TotalEnergies is proud to support LyondellBasell on its climate goals. The signing of these new upside sharing CPPAs in
“We are taking decisive steps to reduce our scope 1 and 2 greenhouse gas emissions and power purchase agreements are a critical lever towards meeting our targets”, said Chris Cain, LyondellBasell Senior Vice President for Net Zero Transition Strategy. “These agreements with TotalEnergies help us accelerate the development of clean energy and shift to use low carbon energy at our sites.”
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TotalEnergies and electricity in the
TotalEnergies is one of the top renewable energy developers in
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.
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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. TotalEnergies SE has no liability for the acts or omissions of these 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 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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FAQ
What is the latest renewable Corporate Power Purchase Agreement signed by TotalEnergies (TTE)?
What are the details of the CPPA signed with LyondellBasell?
What is the capacity of the Brazoria Solar farm and when is the commercial start-up planned?
What is the capacity of the Cottonwood Bayou Solar plant and when is the commercial start-up planned?
What is TotalEnergies' goal in terms of renewable power generation by 2030?
