Apollo Funds Acquire 50% Stake in 2 GW Texas Solar and BESS Portfolio from TotalEnergies

Rhea-AI Summary

Apollo Funds has agreed to acquire a 50% stake in a Texas solar and battery energy storage system portfolio from TotalEnergies. The portfolio includes approximately 2 GW of solar and BESS assets in Texas' ERCOT market, comprising three solar projects (1.7 GW) and two battery storage projects (300 MW). TotalEnergies will maintain the remaining 50% stake and continue operating the assets, which include Danish Fields, Cottonwood, and Hill Solar I.

Apollo's Clean Transition strategy has deployed about $40 billion into energy transition and sustainability-related investments over the past five years. The company targets deploying $50 billion in clean energy and climate investments through 2027, with potential to deploy over $100 billion by 2030. The transaction is expected to close in Q4 2024.

Positive

• Acquisition of 50% stake in 2 GW renewable energy portfolio in strategic ERCOT market locations
• Partnership with established operator TotalEnergies
• Portfolio includes highly contracted assets
• Expansion of Apollo's clean energy portfolio
• Aligned with Apollo's $50 billion clean energy investment target through 2027

Negative

• None.

Insights

Financial Analyst

This strategic acquisition marks a significant expansion of Apollo's renewable energy portfolio in the critical ERCOT market. The $40 billion deployment in energy transition over the past five years, coupled with ambitious targets of $50 billion through 2027 and $100 billion by 2030, demonstrates Apollo's substantial commitment to the clean energy sector.

The portfolio's value lies in its highly contracted nature, which typically provides stable, predictable cash flows. The Texas location is particularly strategic given ERCOT's growing energy demands and the state's favorable renewable energy environment. The partnership with TotalEnergies, retaining operational control, reduces operational risk while allowing Apollo to benefit from their expertise in energy management.

For investors, this represents a calculated move into infrastructure assets that offer potential long-term returns with relatively lower volatility, while positioning Apollo favorably in the rapidly growing renewable energy sector.

Energy Infrastructure Analyst

The 2 GW portfolio acquisition is strategically significant in the ERCOT market, where grid reliability and energy demand continue to grow. The combination of 1.7 GW solar and 300 MW battery storage creates a robust hybrid system that can provide more reliable power delivery compared to standalone solar projects.

The battery storage component is particularly valuable in Texas, where energy arbitrage opportunities and grid stabilization services can generate additional revenue streams. The geographic positioning in ERCOT's market allows for optimal power distribution and maximizes the portfolio's utility-scale value.

The continued operational involvement of TotalEnergies ensures seamless integration and leverages their extensive experience in managing large-scale energy assets, while Apollo's capital injection supports portfolio expansion and optimization.

NEW YORK, Dec. 04, 2024 (GLOBE NEWSWIRE) -- Apollo (NYSE: APO) today announced that funds managed by Apollo affiliates (the “Apollo Funds”) have agreed to acquire a 50% stake in a Texas solar and battery energy storage system (“BESS”) portfolio from TotalEnergies. The portfolio includes approximately 2 GW of solar and BESS assets in strategic locations in Texas’ ERCOT market, consisting of three solar projects with a total capacity of 1.7 GW and two battery storage projects with a combined capacity of 300 MW. TotalEnergies will retain a 50% stake in the portfolio and continue to operate the assets, which include Danish Fields, Cottonwood and Hill Solar I.

Apollo Partner Brad Fierstein said, “We are pleased to partner with TotalEnergies, a leading energy company at the forefront of the energy transition, and to invest in a highly contracted, scaled renewable asset portfolio. Apollo’s Clean Transition strategy enables us to be a flexible and long-term capital partner, supporting the growth of TotalEnergies’ Integrated Power business and capital recycling strategy.”

Over the past five years, Apollo-managed funds have deployed approximately $40 billionⁱ into energy transition and sustainability-related investments, supporting companies and projects across clean energy and infrastructure, including offshore and onshore wind, solar, storage, renewable fuels, electric vehicles as well as a wide range of technologies to facilitate decarbonization. Across asset classes, Apollo targets deploying $50 billion in clean energy and climate investments through 2027 and sees the opportunity to deploy more than $100 billion by 2030.

The transaction is subject to customary closing conditions and is expected to be completed in Q4 2024.

About Apollo

Apollo is a high-growth, global alternative asset manager. In our asset management business, we seek to provide our clients excess return at every point along the risk-reward spectrum from investment grade credit to private equity. For more than three decades, our investing expertise across our fully integrated platform has served the financial return needs of our clients and provided businesses with innovative capital solutions for growth. Through Athene, our retirement services business, we specialize in helping clients achieve financial security by providing a suite of retirement savings products and acting as a solutions provider to institutions. Our patient, creative, and knowledgeable approach to investing aligns our clients, businesses we invest in, our employees, and the communities we impact, to expand opportunity and achieve positive outcomes. As of September 30, 2024, Apollo had approximately $733 billion of assets under management. To learn more, please visit www.apollo.com.

Apollo Contacts

Noah Gunn
Global Head of Investor Relations
Apollo Global Management, Inc.
(212) 822-0540
IR@apollo.com

Joanna Rose
Global Head of Corporate Communications
Apollo Global Management, Inc.
(212) 822-0491
Communications@apollo.com

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ⁱ As of June 30, 2024. Deployment commensurate with Apollo’s proprietary Climate and Transition Investment Framework, which provides guidelines and metrics with respect to the definition of a climate or transition investment. Reflects (a) for equity investments: (i) total enterprise value at time of signed commitment for initial equity commitments; (ii) additional capital contributions from Apollo funds and co-invest vehicles for follow-on equity investments; and (iii) contractual commitments of Apollo funds and co-invest vehicles at the time of initial commitment for preferred equity investments; (b) for debt investments: (i) total facility size for Apollo originated debt, warehouse facilities, or fund financings; (ii) purchase price on the settlement date for private non-traded debt; (iii) increases in maximum exposure on a period-over-period basis for publicly-traded debt; (iv) total capital organized on the settlement date for syndicated debt; and (v) contractual commitments of Apollo funds and co-invest vehicles as of the closing date for real estate debt; (c) for SPACs, the total sponsor equity and capital organized as of the respective announcement dates; (d) for platform acquisitions, the purchase price on the signed commitment date; and (e) for platform originations, the gross origination value on the origination date.

FAQ

What is the size of the solar and BESS portfolio Apollo (APO) is acquiring from TotalEnergies?

Apollo is acquiring a 50% stake in a 2 GW portfolio, consisting of 1.7 GW of solar projects and 300 MW of battery storage projects in Texas.

When is Apollo's (APO) acquisition of TotalEnergies' solar portfolio expected to close?

The transaction is expected to close in Q4 2024, subject to customary closing conditions.

How much has Apollo (APO) invested in energy transition and sustainability over the past five years?

Apollo-managed funds have deployed approximately $40 billion into energy transition and sustainability-related investments over the past five years.

What are Apollo's (APO) clean energy investment targets for 2027 and 2030?

Apollo targets deploying $50 billion in clean energy and climate investments through 2027 and sees the opportunity to deploy more than $100 billion by 2030.