PARIS - In a strategic move to bolster its integrated power operations in Germany, TotalEnergies (EPA:TTEF) (Paris:TTE) (LSE:TTE) (NYSE:TTE) has announced the acquisition of Kyon Energy, a prominent developer of battery storage systems in the country. The deal, which involves an upfront payment of €90 million along with additional earn-out payments contingent on development milestones, aligns with TotalEnergies' growth trajectory in the renewable energy sector.
Kyon Energy, established in 2021, has developed a portfolio of 770 megawatts (MW) of projects, featuring competitive connection costs. Within this portfolio, 120 MW are operational, 350 MW are under construction, and 300 MW are ready for construction. The company also has an advanced-stage pipeline of 2 gigawatts (GW) of projects.
With the expertise of Kyon Energy’s team, TotalEnergies plans to develop, construct, and operate these projects, primarily located in Northern Germany. This acquisition complements TotalEnergies' recent achievements in the German market, which include securing a maritime concession for a 3 GW offshore wind farm, acquiring renewable energy aggregator Quadra Energy, and winning a contract to install and operate 1,100 high-power electric vehicle charging points.
The integration of battery storage systems is expected to enhance the resilience of the German electricity grid, offering solutions for congestion and providing additional flexibility. This is seen as a crucial step in supporting the expansion of renewable energy within the country.
Stéphane Michel, President Gas, Renewables & Power at TotalEnergies, expressed his enthusiasm for the acquisition, stating that it is a significant component of the company's strategy in Germany's electricity market, which is the largest in Europe. He noted that the move will accelerate the development of TotalEnergies' integrated power activities in Germany, aiming to achieve a 12% return on average capital employed (ROACE) by 2028 for this business segment.
Adrian Kapsalis, CEO of Kyon Energy, also commented on the acquisition, highlighting it as a pivotal moment for the company's aim to become a leading flexibility provider in Europe and its contribution to Germany's transition to a more sustainable electricity system.
The acquisition is subject to approval from regulatory authorities.
TotalEnergies, aiming for net-zero emissions by 2050, is building a portfolio of renewable and flexible assets to deliver clean power. As of the end of 2023, the company's gross renewable electricity generation capacity stood at 22 GW, with plans to expand to 35 GW by 2025 and over 100 terawatt-hours of net electricity production by 2030.
The information is based on a press release statement from TotalEnergies.
InvestingPro Insights
In light of TotalEnergies' recent strategic acquisition of Kyon Energy, key financial metrics from InvestingPro provide additional context for investors considering the company's stock. With a robust Market Cap of $147.5 billion and a P/E Ratio that has adjusted to a favorable 6.53 over the last twelve months as of Q1 2023, TotalEnergies shows a strong financial footing. The company's commitment to shareholder returns is also evident, as it has not only maintained dividend payments for 48 consecutive years but has also seen a significant Dividend Growth of 20.57% in the same period.
Among the InvestingPro Tips, it's noteworthy that TotalEnergies' management has been actively engaged in share buybacks, signaling confidence in the company's value. Additionally, the stock's low price volatility may appeal to investors seeking stability in the often-erratic energy sector. With analysts predicting profitability for the current year and the company's prominent position in the Oil, Gas & Consumable Fuels industry, TotalEnergies appears to be navigating the energy transition with strategic acumen.
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