TOTAL's (TOT) Unit To Expand Energy Storage Operation Via JV
Zacks Investment Research | Apr 05, 2019 08:18AM ET
TOTAL S.A. (NYSE:TOT) announced that its subsidiary Saft has entered into an agreement to create a joint venture (JV) with Tianneng Energy Technology (TET), a subsidiary of the Chinese privately-owned Tianneng Group, in order to expand their energy storage businesses.
The JV will be manufacturing advanced Li-ion cells, modules and packs from the Changxing Gigafactory, with a potential capacity of 5.5 gigawatt hours (GWh). Saft will have a 40% shareholding in the new JV, while the Tianneng Group will hold the remaining shares.
Demand for Energy Storage is Soaring
Per a report from ReportLinker, the global market for lithium-ion battery will touch $56 billion by 2024 from the current level of $24.5 billion on the back of rising demand for energy-efficient, safe and low-cost batteries.
TOTAL’s strategy to expand the production of lithium-ion products is well timed, and will be able to cater to the rising demand in Chinese and worldwide markets. The increasing usage of E-bikes and electric vehicles, and growing reliance on producing electricity from renewable sources will continue to create demand for lithium-ion products.
The JV partners plan to expand the Changxing facility to ramp up its production capacity for meeting future demand.
TOTAL’s Renewable Goal
TOTAL has been investing in developing renewable energies, with an objective to diversify its global energy mix. The company believes that renewables are an ideal complement to fossil fuels. It has acquired a majority stake in SunPower Corporation (NASDAQ:SPWR) to expand its operation in the renewable space.
TOTAL projects the share of solar and other renewable energies in the global energy mix to increase from 9% to 20% by 2035. The increasing usage of solar and renewable energy creates increasing demand for solar panels and battery storage devices. TOTAL is well placed in the renewable market space through acquisitions and JVs. The company continues to expand its footprint in the renewable space through strategic alliances.
Price Movement
TOTAL’s shares have underperformed its Zacks Investment Research
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