TotalEnergies has created one of the largest private equity firms’ partnership with KKR. They’ve recently announced plans to sell a 50% interest in their North American solar portfolio. This transaction is remarkable in size—$1.25 billion. It includes six utility-scale solar projects – 1.3 gigawatts (GW) of capacity in all – and 41 distributed generation sites (140 megawatts (MW) of capacity), mainly located across the United States. In exchange, TotalEnergies will receive $950 million at closing—the bulk of which will be accomplished through transactions and bank refinancing.
Also, the deal apparently allows TotalEnergies to retain only 50% of an ownership stake in the affected assets. Even after the agreement is finalized, they will continue to have day-to-day control. These projects produce electricity that they sell to third party purchasers. Or, on the other hand, TotalEnergies will sell the electricity themselves.
Strategic Investment and Expansion
TotalEnergies has thus far pledged more than $23 billion in energy transition investments via its new infrastructure platform. The company believes North America will be a key, deregulated, electricity market that will be crucial to the company’s ability to scale its integrated business model.
Stéphane Michel, the president of TotalEnergies gas, renewables, and power, was thrilled with “winning this partnership.”
“We are pleased to enter into this new strategic partnership with KKR in North America, a key deregulated electricity market to expand our integrated business model.” – Stéphane Michel
This transaction aligns with TotalEnergies’ strategic ambition to maximize value from its recently commissioned assets. It further improves the profitability of its expanded integrated power business.
“Aligned with our strategy, this transaction unlocks value from newly commissioned assets and further strengthens the profitability of our integrated power business.” – Stéphane Michel
KKR’s Commitment to Renewables
KKR has over a decade of history investing in renewable energy via its infrastructure platform. We see the acquisition of TotalEnergies’ North American solar portfolio as a positive sign of their investment strategy and long-term commitment to sustainability.
This collaboration allows the two firms to strengthen their renewable energy impact. United, they’re prepared to leverage the increasing global demand for sustainable energy solutions.
“We have long been investors in renewables through our infrastructure platform, having committed more than $23bn to date in energy transition investments. TotalEnergies’ North American solar portfolio is a great fit for us, representing high-quality renewable energy assets with long term contracts.” – Cecilio Velasco
TotalEnergies is looking forward to this innovative partnership. That’s not to mention their plans to sell down up to 50% of their renewable assets once operational and risks are diminished. This strategic shift comes with a clear-line goal for the company’s integrated power business to earn an overall 12% return on equity.
Future Plans and Objectives
That’s why TotalEnergies is showing huge leadership by working with KKR to do so. This partnership will ensure that connects quickly to the rapidly evolving energy ecosystem and makes its renewable portfolio deeper and more competitive. TotalEnergies still intends to keep KKR as a partner while having operational control. This strategy stands to accelerate this growth and increase its impact in the North American marketplace.
The collaboration with KKR marks a notable step in TotalEnergies’ ongoing efforts to adapt to the evolving energy landscape and strengthen its portfolio in the renewable sector. By maintaining operational control while partnering with KKR, TotalEnergies aims to drive growth and expand its influence within the North American market.