Apollo, a global alternative investment manager, has agreed with French energy major TotalEnergies to acquire a 50% interest in a portfolio of Texas-based renewable energy assets. The portfolio includes about 2 gigawatts of solar energy and battery energy storage assets. This strategic partnership is another step both companies take toward driving the global transition to energy.
It consists of three large-scale solar projects with cumulative capacity of 1.7 GW and two battery storage projects with 300 MW in addition to the capacity. All of the combined assets will be held by TotalEnergies under a 50% share in the assets with continued management and operation. The combination forms part of the total recycling of capital in renewals, optimization of investments for renewables, and profitability from the Integrated Power business lines.
This investment reflects Apollo’s increasing commitment to sustainable investing. The firm recently introduced a $4 billion investment strategy called Apollo Clean Transition Capital, which will fund companies transitioning into clean energy and sustainable industries. The company has also outlined ambitious targets to deploy $50 billion in clean energy and climate-related capital over the next five years, which would then ramp that up over time to more than $100 billion by 2030. Over the last five years since its fund launch, Apollo’s funds have committed around $40 billion in energy transition and sustainability-related investments.
Brad Fierstein, Partner at Apollo, stated: “We are pleased to partner with TotalEnergies, a leading energy company at the forefront of the energy transition, and to invest in a highly contracted, scaled renewable asset portfolio. Apollo’s Clean Transition strategy enables us to be a flexible and long-term capital partner, supporting the growth of TotalEnergies’ Integrated Power business and capital recycling strategy,” Fierstein said.
The deal will raise $800 million in cash for TotalEnergies since it raises $550 million from Apollo and the remaining $250 million through refinancing of shareholder loans. The company said that the deal is aligned with the overall strategy for optimizing the capital allocation to renewable energy. According to Stéphane Michel, President of Gas, Renewables and Power at TotalEnergies, this transaction forms part of the reinforcement of its renewable energy portfolio. “In line with our strategy, these transactions will allow us to optimize our capital allocation in renewables and therefore will contribute to improving the profitability of our Integrated Power business,” Michel said.
It’s part of a €1.57 billion, or USD 1.65 billion deal by TotalEnergies to buy the German-based developer of renewable sources VSB Group. The complete acquisition of VSB Group cements TotalEnergies’ position further in the European market for renewables as part of a dual strategy for the continued growth of TotalEnergies’ worldwide clean energy footprint and optimizing current investments.
The deal signals a step scale speed up on players within the renewable space from corporates to financial. TotalEnergies has vigorously been scaling its clean footprint while scaling up renewable power generation to 100 GW by 2030. A second theme within sustainable investing from Apollo is its endeavor in deploying long-term capital to aid energy transition and industry decarbonization.
As the energy landscape of the world continues to shift, partnerships like that between Apollo and TotalEnergies have become even more important. With the financial acumen of Apollo and the operational abilities of TotalEnergies, this partnership goes forward with the promise to deliver scale renewable energy solutions while driving profit and sustainable growth. This transaction constitutes a critical step in the broader scheme of global efforts toward mitigating the impacts of climate change and energizing the energy transition for both parties.