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15 March 2023

TotalEnergies picks up the $336bn Aussie trail that Rethink predicted

The renewables arm of the French oil giant TotalEnergies has revealed a development pipeline of Australian projects it could undertake, amounting to 30GW worth of electrolysis capacity aimed at green hydrogen production and export. It seems as though the French are picking up the trail that Rethink Energy has blazed not long ago, which led our customers to valuable conclusions about the potential that Australia holds in terms of renewable power generation in the form of hydrogen and solar electricity.

Only two months ago, at the beginning of 2023, Rethink published its flagship cornerstone report titled ‘Annual Primary Electricity 3.0’, which employs a holistic approach when dissecting the global electricity market as it takes into account the potential for nuclear energy, a realistic scale-up of renewable sources like wind and solar and how fast economies can decouple their GDP from burning fossil fuels. The striking conclusion of that report was pointing at a potential of around $336 billion in annual revenue for Australian green hydrogen exporters. This figure is comparable to the $300+ billion worth of revenue for oil giants like Shell, BP, Chevron, Exxon and TotalEnergies. With a shrinking oil market anticipated from 2027 onwards, prompted by a decline in ICE (Internal Combustion Engine) vehicle sales, these companies need to sacrifice the colossal profits that they made of the back of the energy crisis and reinvest them into renewable projects instead of giving them to shareholders. But not just for greenwashing the public into thinking their shareholders are actually thinking about the people – but for real.

Last week news broke about the first Welsh floating wind farm developed by TotalEnergies alongside Simply Blue. Sitting at 96MW, the first phase of the project is aimed to be concluded by 2026, ahead of the farm being expanded to its full potential giga-watt scale. A month prior to this announcement, TotalEnergies made it public that it will develop 600MW of offshore wind in Taiwan.

Oil majors have so far only allocated around 5% of profits to the development of renewable projects – with the intention of that number rising to 25% by 2025 in the case of TotalEnergies. So even though they are collectively owning and developing a lot of green projects around the globe, they could do so much more. And when it comes to Australia, more doesn’t even cover it.

Still relying on coal for electricity generation due to natural resources and mining expertise, the land down under will see a massive spike in renewables installations – especially solar – as hundreds of billions have already been promised by various companies for wind farms, solar parks and hydrogen plants to be built around its coast and among its vast desert areas.

TotalEnergies is right to invest in expanding its operations in Australia but needs to act fast as it will want to be there when the hydrogen market explodes. According to Rethink, the market size of electrolyzers will reach a tremendous $1.2 trillion in 2050 – all the revenue generated by those who sell electrolyzers. All the companies that will buy them in order to sell the hydrogen produced will have to collectively turn a profit on the $1.2 trillion investment into electrolysis plants. And they will, because the hydrogen industry is coming, and the bigger share you in the pie, the greater the returns. With $36.2 billion in 2022 profits, TotalEnergies is expected to invest only $1.81 billion (the 5% mentioned above) into renewables. One can only wonder where these companies will end up in 2040…