TotalEnergies is ahead of Shell and BP in the race for renewable energy, but its shares are falling.
Reuters data shows that the French energy company TotalEnergies is now ahead of its competitors Shell (LON:RDSa) and BP (NYSE:BP) in the race to build up a renewables business.
Even though climate change is getting more attention, investors are still being cautious. So far this year, shares of the three European giants have done worse than their oil and gas-focused U.S. competitors Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX).
Race for renewables: https://graphics.reuters.com/OILMAJORS-RENEWABLES/zjvqjqgrnpx/chart.png
TotalEnergie’s shares have also done much worse than those of its British competitors, even though the company made a record profit in the third quarter of 2022 because its oil and gas business was doing well and it had almost no debt.
BP, Shell, and TotalEnergies have all made big plans to switch to low-carbon and renewable energy sources over the next few decades in order to cut greenhouse gas emissions to net zero.
Even though they still spend most of their money on oil and gas, they plan to put more money into low-carbon investments in the coming years.
According to company data, TotalEnergies had 7.4 gigawatts (GW) of net installed renewable capacity by the end of September. This came after investments like a $2 billion partnership with India’s Adani Group and the purchase of a 50% stake in Clearway, one of the largest renewable energy companies in the U.S.
BP, on the other hand, has built 2 GW of renewable energy capacity that is already in use. This is thanks in part to its 50% stake in Lightsource BP, one of the world’s top solar producers.
Shell’s net capacity is 2.2 GW, which is a little bit higher than before. This year, Shell bought U.S. producer Savion and Indian renewables platform Sprng Energy.
The pipelines of projects under construction or approved for development by the three companies tell a similar story, with 26.9 GWW for TotalEnergies, 26.9GW for BP, and 5.2 GW for Shell.
BP wants to have 50 GW of net renewables by 2030, while TotalEnergies wants to have 100 GW of gross renewables. Shell hasn’t decided on a capacity goal, but it wants to trade 530 terawatt hours of electricity during this time.
TotalEnergies has also paid down its debt faster than its two main competitors. By the end of this year, it could be net debt-free, giving it more freedom to invest and buy.
Shell, TotalEnergies, and BP’s gearing – https://graphics.reuters.com/OILMAJORS-DEBT/egpbynwzmvq/chart.png
Investors haven’t been convinced by the growing investments in renewables, and credit rating agency Moody’s (NYSE:MCO) also sounded a cautious note, saying that the change would put the companies in direct competition with utilities for projects with lower returns than traditional oil and gas investments.
Moody’s said in a note: “The total returns achieved will depend on how well BP, Shell, and TotalEnergies can improve returns by optimising ownership, the funding mix, marketing, and integration into their overall offerings.”
It also said that the three companies had invested in projects and infrastructure ranging from charging electric cars to making hydrogen, and that it would be years before they knew how profitable these investments would be.
Shell’s plans for spending can be seen in this chart: http://graphics.reuters.com/OIL-MAJORS/ENERGY-TRANSITION/egvbkrdarpq/chart.png
BP’s spending plans can be seen in this chart from Reuters: http://graphics.reuters.com/OIL-MAJORS/ENERGY-TRANSITION/gkvlgnoxdpb/chart.png
TotalEnergies’ plans for investments can be seen in this chart: http://graphics.reuters.com/OIL-MAJORS/ENERGY-TRANSITION/myvmnzeagpr/chart.png
