TotalEnergies has significantly expanded its presence in the European power market with a €5.1 billion all-stock agreement to acquire a 50% stake in a flexible power generation platform owned by Energetický a průmyslový holding (EPH). The deal, announced on , positions the French energy major as a key player in balancing the increasing reliance on intermittent renewable energy sources across Europe.
A Strategic Shift in Europe’s Energy Landscape
The acquisition marks one of TotalEnergies’ most substantial moves to scale its gas-to-power integration strategy, a core pillar of its broader energy transition plan. The transaction creates a 50/50 joint venture controlling more than 14 gigawatts (GW) of flexible generation capacity, encompassing gas-fired plants, biomass facilities, and battery systems, with an additional 5 GW currently under development. TotalEnergies anticipates the deal will deliver 15 terawatt-hours (TWh) of net electricity production annually, increasing to 20 TWh by .
The agreement involves TotalEnergies issuing approximately 95.4 million shares to EPH, valued at €53.94 per share, making EPH one of TotalEnergies’ largest shareholders with roughly 4.1% of its capital. The enterprise value of the assets being acquired is estimated at €10.6 billion.
Who is EPH?
EPH, founded in , has become a significant force in the European energy sector by acquiring and restructuring assets that larger utilities were divesting. The company, backed by Czech and Slovak investment groups J&T and PPF, focused on acquiring coal plants, gas pipelines, and thermal power stations, often at competitive prices. Key milestones in EPH’s expansion include the purchase of Slovak Gas for €2.6 billion, and a series of acquisitions from EDF, E.ON, Enel, RWE, and Vattenfall between and . Currently, billionaire Daniel Křetínský and Patrik Tkáč control the group.
The Joint Venture: Capacity and Location
The newly formed joint venture will manage a diverse portfolio of assets spread across Western Europe. The portfolio currently includes approximately 7.5 GW of capacity in Italy, primarily consisting of new generation gas plants. In the UK and Ireland, EPH holds 7.1 GW of capacity spanning gas, biomass, and battery storage. The Netherlands contributes 3.6 GW, focused on gas and batteries, while France accounts for 1.1 GW of grid-scale battery projects. Around 5 GW of additional projects are currently under development across these countries.
The operational control of the assets will be shared between TotalEnergies and EPH, while each company will market its share of production through tolling arrangements. Tolling contracts allow buyers to utilize the capacity of a plant by supplying the fuel, gaining access to power without owning the asset.
The Importance of Flexible Capacity
The deal underscores the growing importance of flexible power generation in Europe’s energy transition. As countries increase their reliance on intermittent renewable sources like wind and solar, the need for capacity that can quickly respond to fluctuations in supply and demand becomes critical. Gas turbines, biomass units, and battery systems provide this flexibility, ensuring grid stability and preventing blackouts. Without sufficient flexible capacity, power systems risk instability and price volatility.
Synergies with TotalEnergies’ LNG Strategy
The acquisition also strengthens TotalEnergies’ integrated gas-to-power chain. As a leading global LNG supplier, TotalEnergies can leverage its gas imports to fuel the newly acquired power plants. The company estimates that approximately 2 million tonnes of LNG per year could be directed to this flexible generation portfolio. This integration allows TotalEnergies to capture value at multiple stages, from gas sourcing to power sales, and hedge against commodity price fluctuations.
Implications for the Market
The transaction signals TotalEnergies’ commitment to playing a central role in the European electricity market, beyond its traditional oil and gas business. For EPH, the deal provides liquidity and a strategic partnership with a major energy player. Regulators are expected to scrutinize the deal to ensure it does not create undue market concentration, particularly in Italy and the Netherlands. However, the 50/50 ownership structure and the broad geographic spread of the assets may mitigate competition concerns.
The increased flexible capacity is expected to benefit consumers by enhancing grid reliability and potentially moderating price spikes. As Europe continues to electrify its economy, the ability to efficiently manage fluctuations in supply and demand will be crucial for maintaining affordable and reliable power.
Risks and Future Outlook
While the strategy offers significant benefits, it also carries risks. Continued reliance on gas exposes Europe to geopolitical vulnerabilities and price volatility. Some environmental groups argue that investing in gas infrastructure may delay the full deployment of renewable energy storage and grid upgrades. However, proponents argue that flexible gas plants are necessary to ensure grid stability during the transition to a fully decarbonized energy system. The success of the joint venture will depend on navigating these challenges and adapting to evolving market conditions.
