TotalEnergies Invests in East African Hydropower

TotalEnergies, a French energy giant, is expanding its footprint in East Africa by acquiring a significant portfolio of hydroelectric projects in the Great Lakes region and Malawi. This strategic move includes acquiring notable shares in a large power plant in Uganda, where TotalEnergies is also developing a substantial oil mega-project. The acquisition consolidates TotalEnergies' presence in East Africa, enhancing its energy portfolio.

In a press release dated July 30, 2024, TotalEnergies confirmed signing an agreement with Norwegian company Statec, granting it "100% of its subsidiary SN Power." This portfolio encompasses minority interests in two projects under development in Rwanda and Malawi, with capacities of 260 MW and 360 MW respectively. The centerpiece of this acquisition is the Bujagali Dam in Uganda, in which TotalEnergies now holds a 28.3% stake.

With a capacity of 250 MW, the Bujagali Dam is one of the largest hydroelectric plants in the region, providing more than a quarter of Uganda's peak electricity demand. Hydropower is a crucial component of Uganda's energy mix, accounting for 82% of the country's electricity in 2023, according to the Ugandan Electricity Regulatory Authority.

Patrick Pouyanné, Chairman and CEO of TotalEnergies, expressed his enthusiasm for entering the hydropower sector in Uganda, a country where the company is also developing a major oil project. Announced in 2022, this oil project involves drilling 419 wells in the western part of Uganda, with a third located in the Murchison Falls Natural Park, a significant biodiversity reserve. The project has faced strong opposition from environmental and human rights groups. A nearly 1,500-kilometer pipeline is planned to transport oil from the Lake Albert fields to the port of Tanga in Tanzania.

Despite its oil ambitions, TotalEnergies asserts that this hydropower acquisition aligns with its commitment to contributing to Africa's energy transition. In December 2023, the company announced the construction of the Mphanda Nkuwa hydropower plant in Mozambique, expected to produce 1.5 GW by 2031. These initiatives are part of TotalEnergies' zero-carbon strategy, aiming to achieve carbon neutrality by 2050. By the end of 2023, the company's renewable electricity generation capacity stood at 22 GW, with plans to increase this to 35 GW by 2025.

While TotalEnergies advances its green investments, other major oil producers have shown sluggish progress. Shell, for instance, abandoned several renewable energy projects in 2023, including an offshore wind farm off the coast of Massachusetts, resulting in over $60 million in penalties. Consequently, the portfolios of these supermajors have become less diversified. British BP reduced its investments in low-carbon energy from 30% in 2022 to below 10% in 2023, and Shell followed a similar trend, decreasing from 16% to 10%.

TotalEnergies' investment in East African hydropower represents a significant step in its efforts to balance traditional oil operations with renewable energy projects, reinforcing its role in Africa's evolving energy landscape.