Back to top

Image: Bigstock

TotalEnergies (TTE) and Sempra Agree to Develop Clean Energy

Read MoreHide Full Article

TotalEnergies SE (TTE - Free Report) announced that it has signed two Memorandums of Understanding (MoU) with Sempra Energy (SRE - Free Report) for the development of more clean energy in North America. One MoU is signed for the Vista Pacífico LNG export project in Mexico, and the other for the co-development of several onshore and offshore renewables projects.

Per the MoU signed for the Vista Pacífico LNG export project in Mexico, TotalEnergies is set to offtake one-third of SRE’s future LNG production and become a shareholder in the project with a minimum stake of 16.6%. This MoU further extends the existing partnership of TotalEnergies and Sempra Energy in Cameron LNG — a 12-million tons per year (Mt/y) LNG export facility operating in Hackberry, LA — and ECA LNG, a nearly 3 Mt/y liquefaction facility under construction in Baja California, Mexico.

TotalEnergies has its presence throughout the LNG value chain and has LNG operations across the globe. TTE aims to have a global LNG portfolio of nearly 50 Mt/y by 2025 and this agreement will assist TTE to meet its target.

Per the second MoU, TotalEnergies and Sempra will co-develop different renewable projects in North America and expand their respective clean energy production volumes.

TotalEnergies’ Clean Energy Vision

TotalEnergies targets to achieve zero emissions by 2050 and is taking the necessary measures to attain the same. TTE is making systematic investments in operations to achieve clean energy transition goals. This new MoU is in sync with TotalEnergies’ long-term goal to produce a substantial volume of electricity from renewable sources and further expand the LNG portfolio.

TotalEnergies has plans to continue expanding the clean energy generation business to reach 35 gigawatts (GW) and 100 GW of gross production capacity from renewable sources by 2025 and 2030, respectively. TotalEnergies is gradually building a portfolio of low-carbon businesses that could account for 15-20% of sales by 2040. In the near term, TotalEnergies plans to have more than 16 GW of renewable gross capacity in operation by year-end 2022.

Future of Renewable Energy

Per International Energy Agency (“IEA”) report, by 2026, global renewable electricity capacity is forecast to rise more than 60% from 2020 levels to more than 4,800 GW. The IEA report predicts that renewables are set to account for 95% of the increase in global electricity capacity through 2026.

Per IEA, offshore wind will continue to prosper and global offshore wind capacity is forecast to more than triple by 2026. IEA predicts that global capacity additions of offshore wind are set to reach 21 GW by 2026, courtesy of rapid expansion in new markets beyond Europe and China.

Per the U.S. Energy Information Administration (“EIA”), 46.1 GW of new utility-scale electric generating capacity will be added to the U.S. power grid in 2022. EIA expects the majority of the total capacity addition to come from the renewable space, with a total solar and wind generation of 32 GW planned to be added in the United States in 2022.

Price Performance

In the past six months, TotalEnergies’ shares have underperformed the industry.

Zacks Investment Research
Image Source: Zacks Investment Research

Zacks Rank & Other Key Picks

TotalEnergies currently sports a Zacks Rank #1 (Strong Buy). Other top-ranked stocks in the same space include Chesapeake Energy (CHK - Free Report) and Evergy (EVRG - Free Report) , each having a Zacks Rank #2 (Buy).  You can see the complete list of today’s Zacks #1 Rank stocks here.

Chesapeake Energy’s long-term (three to five) earnings growth is currently pegged at 6.3%. CHK delivered an average earnings surprise of 22.8% in the last four quarters. The Zacks Consensus Estimate for CHK’s 2022 earnings has moved up 19.2% to $10.95 in the past 60 days.

Evergy’s long-term earnings growth is currently pegged at 6.1%. EVRG delivered an average earnings surprise of 87.4% in the last four reported quarters. The Zacks Consensus Estimate for EVRG’s 2022 earnings has moved up 0.6% to $3.53 in the past 60 days.