TotalEnergies Nears Deal to Buy Texas Gas Power Plants

By Bloomberg

Nov 10, 2023

TotalEnergies SE is nearing a deal to buy a fleet of natural gas-fired power plants in Texas as it looks to expand in the US market, according to people familiar with the matter.

The 2.3-gigawatt portfolio is owned by independent power producer TexGen Power LLC and provides capacity equivalent to more than two nuclear reactors. That’s enough to serve nearly half a million homes on the hottest days in the US state, based on figures from the Texas grid operator.

A transaction could be announced as soon as next week, said the people, who asked not to be identified as the information is private. While talks are advanced, they could still be delayed or fall apart, the people said. If completed, the deal could be worth several hundred million dollars, according to some of the people. 

TotalEnergies, based near Paris, declined to comment on “market rumors,” while adding that the company is “interested in acquiring gas-fired power plants to complement its renewable assets in the US” and that’s currently in “discussions with several potential sellers on this subject.”

TexGen didn’t immediately respond to requests for comment.

TotalEnergies has pursued gas plants to complement its growing fleet of wind and solar farms that provide more sporadic generation. Chief Executive Officer Patrick Pouyanne said last month that the company might make such an acquisition in Texas. The French oil major is aiming to reach 100 gigawatts of renewable power globally by 2030, up from 20.2 gigawatts at the end of the third quarter. 

Gas plants have become more valuable in the last couple of years amid supply issues, the rise of intermittent wind and solar generation and higher power prices in key markets like Texas. Total, which has been acquiring gas-fired plants in France, Belgium and Spain, plans to invest about $4 billion a year on power generation on top of expanding oil and gas production.

In Texas, many generators are reaping record revenues, or close to it, after the state grid operator pushed through reforms to help avoid a repeat of widespread blackouts in a deadly 2021 winter storm. 

A critical driver of those reforms has been boosting profits at thermal plants — those running on nuclear, coal and gas — and to create incentives for new generation. Developers have been reluctant to pour billions of dollars into projects because of uncertainty about ongoing reforms and concerns that the flood of solar and battery facilities will curb power prices. 

The purchase of TexGen plants would complement TotalEnergies’ recent foray in the US clean power market. The French company had a gross installed capacity of 6.2 gigawatts of solar and wind power in North America and a further 3 gigawatts in construction on the continent at the end of the third quarter, thanks to recent acquisitions such as a 50% stake in Clearway Energy Group.

Last month, the French energy giant started commercial operations at a 380-megawatt solar farm located south of Houston, which the company said produces enough green electricity to cover the equivalent consumption of 70,000 homes. 

©2023 Bloomberg L.P.

By Naureen S. Malik , Francois de Beaupuy


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