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TOTAL Acquires Direct Energie, Expands Clean Energy Base

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TOTAL S.A. (TOT - Free Report) announced that it has completed the acquisition of 73% of Direct Energie. To this end, TOTAL paid 49.1 cents (42 euros) per share, which represents nearly $1.65 billion (1.4 billion euros). The agreement was entered by the two companies this April. (Read more: TOTAL to Expand Electric & Gas Operation Via Acquisition)

Long-Term Goal of TOTAL

TOTAL is an integrated energy company and has set a goal to expand its green power generation globally. The company aims to attain an electrical production capacity of 5 gigawatt (GW) from renewable sources within five years. The acquisition of Direct Energie, a major energy player operating in France and Belgium, will add 1.35 GW of clean energy generation capacity to TOTAL’s production portfolio.

The company plans to expand its renewable operation globally through its subsidiary SunPower Corporation (SPWR - Free Report) , making strategic acquisitions and investing in organic projects.

Global Scenario

Importance of renewable energy, particularly solar, is increasing globally due to technological advancement that is bringing down the cost of installation of utility scale plants and availability of sunlight across globe.

Per a projection from International Energy Agency (IEA), the global share of renewable energy will increase to 20% in 2035 from 9% in 2016, of which the major portion is expected to come from solar and wind sources.

India will be a major contributor in global renewable power addition and could be a new destination for the solar energy operators due to its ambitious plan to add 100 GW by 2022. It is not possible for the Indian solar panel producers to meet the target set by the government, so the utility plant operators are exporting panels to the solar projects.

International operators like Canadian Solar Inc. (CSIQ - Free Report) and JinkoSolar Holding Company Limited (JKS - Free Report) are exporting modules to India for development of the solar projects. TOTAL can explore renewable opportunities and develop solar projects in India.

Price Movement

In a year’s time, TOTAL’s shares have returned 28.9% compared with the industry’s rally of 22.1%.


Zacks Rank

Currently, TOTAL has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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