Total Eren Strengthens Its Renewable Energy Foothold In South Europe

Posted by MarketsandMarkets on Mar 1, 2019 6:37:02 PM
MarketsandMarkets

French renewable energy company Total Eren has agreed to buy Novenergia Holding Company, a Renewable power producer, in a deal worth more than 1 billion euros. Considering Total Eren’s presence in France, Greece, and Italy, it is evident that with this deal they are gifted with a massive opportunity of expanding their presence in almost the entire Southern Europe.

MarketsandMarkets™ View Point:

Somik Das – Strategic Growth Analyst : Energy and Power, at MarketsandMarkets™, shares his Point of View as mentioned below:

From the entire set of transactions and a thorough analysis of the events building up to the deal, one can clearly demarcate the drivers for both the organizations, which might have led them to concur on this acquisition:

TOTAL EREN Novenergia
  • An opportunity to return to the Portuguese market
  • The returns for Gulbenkian Foundation in Energy and Power had taken a major dip since 2015 because of which they sold off the Partex Oil Company and were looking to sell off Novenergia II assets as well.
  • Adding remarkable strength to their portfolio of solar (both ground mount and rooftop), wind (both offshore and on-shore) and mini-hydro power generation.
  • With lack of proper funding, there was a need for proper working capital.
  • Getting to have a broad presence in the major countries of Southern Europe.
  • Total Eren was an organization that had agreed to uphold the values, ethics, and virtues of Novenergia.
  • A golden opportunity to add to the talent, culture, and history already created by Novenergia.
  • As Gulbenkian Foundation underwent a change in their investment approach and took a more philanthropic standpoint in terms of their investment policy, their vision did not match that of Novenergia.

History of the Business Rationale Leading Up To the Acquisition

The Gulbenkian Foundation was a major investor in the Novenergia II Fund. However, in the month of February 2018, the Foundation, owing to its poor sales and returns in the Oil and Gas Sector decided to sell off the Partex Oil company to a Chinese investor. About the same time, the Foundation’s board of directors had decided on selling off the assets of Novenergia II to another undisclosed Chinese investor. Intense bidding followed through the winter of 2018, and finally, Total Eren entered the scenario and decided to acquire entire Novenergia along with 47 of its assets.

From the financials it is evident that the foundation was not doing great in the Oil and Gas front; whereas, in the other areas of its investment such as charity, art, education, and science the returns on the investments had been stable, if not increased, from 2015 to 2016. This formed the strong backbone to the foundation’s decision to have a more philanthropical approach to its investments.
History of the Business Rationale Leading Up To the Acquisition
A Win-Win Proposition For Total Eren In the European Renewable Energy Space:

From the acquisition, Total will takeover 47 of Novenergia’s Renewable assets. These primarily include solar (ground mount and rooftop Photovoltaic sources), wind (onshore and offshore sources), and mini hydro. A total of 657-megawatt worth generation would go under the belt of Total, this would eventually have a great impact upon the organization, as this would not only boost the company’s renewable energy generation portfolio but also help the organization cut down on its global carbon footprint.

In the light with this development, special focus is drawn upon the distributed generation market, on which MarketsandMarkets™ has already laid special focus on through its report on Distributed Energy Generation. In the report, the solar PV market in Europe is projected to reach USD 5159.2 million by 2022 from an estimated USD 2250.4 million in 2017, at a CAGR of 18.05% during the forecast period. The wind energy market is estimated to be the largest at USD 1469.2 million in 2017 and is projected to reach USD 3109.5 million by 2022 at a CAGR of 16.18%. The predictions made in the report will be a reality soon because of this acquisition.

European Region (Source of Generation) 2017-e 2022-p CAGR (2017-2022)
Solar PV 2250.4 5159.2 18.05%
Wind 1469.2 3109.5 16.18%

Renewable Energy Generation

Conclusion:

The acquisition of Novenergia by Total Eren is one of the major renewable energy generation deals in the recent times, not only because of the financial value of the transaction but also because of the geographic spread of these companies that will be benefited through this deal. Through this deal, Total Eren helps its parent organization Total to get back in the renewable energy picture of Europe and at the same time strengthen its renewable energy portfolio. The deal is a sensible one considering Total Eren’s existence in some of the major European countries like France, Spain, and Italy, which will also become a launchpad for Total Eren to reinforce its position in the regional markets. In addition to the above, the organization is likely to bolster its core generation business, and there is a strong likelihood of a fillip in their regional renewable energy generation in the near future.

Topics: Energy and Power, renewable energy

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