TotalEnergies' Caribbean Renewable Expansion: A Strategic Play in High-Growth Markets

The Caribbean's energy transition is gaining momentum, and TotalEnergies (TTE) has positioned itself as a key player with its recent acquisitions of stakes in AES Dominicana and Puerto Rico's renewable portfolios. These moves are not just about expanding capacity—they're about building a scalable model for decarbonization that leverages synergies with existing LNG operations, grid-stabilizing battery storage systems, and long-term power purchase agreements (PPAs). For investors, this represents a compelling opportunity to capitalize on a region with rising clean energy demand, while TotalEnergies' 35 GW renewable capacity target by 2025 is within reach. Let's dissect the strategic rationale and investment case.

The Acquisitions: A 1.5 GW Catalyst for Growth

In Q2 2025, TotalEnergies secured a 50% stake in AES Dominicana's renewables portfolio, which includes over 1 GW of contracted solar, wind, and Battery Energy Storage Systems (BESS). Of this, 410 MW is already operational or under construction, backed by long-term PPAs. The portfolio also includes 500 MW of projects in development, with BESS designed to integrate with solar plants and stabilize the grid. Meanwhile, its 30% stake in AES Puerto Rico's assets adds 485 MW of solar and BESS capacity (including 285 MW/1,140 MWh of battery storage). Combined, these acquisitions add over 1.5 GW of renewable capacity to TotalEnergies' portfolio, directly advancing its 35 GW target by 2025 (it had 28 GW as of Q1 2025).

Synergies with LNG: A Baseload Advantage

TotalEnergies' Caribbean strategy isn't just about renewables—it's about complementary energy solutions. The company is a top LNG supplier in the region, with a 15-year agreement to supply 400,000 tons annually of LNG to AES's Dominican subsidiary starting in 2027. This LNG will fuel a 470 MW combined-cycle power plant, providing reliable baseload power to complement intermittent renewables. In regions with underdeveloped grids, this hybrid model reduces reliance on fossil fuels while ensuring grid stability—a critical edge over peers like BP and Equinor, which lack similar LNG-to-renewables integration in the Caribbean.

BESS: Grid Stability as a Competitive Weapon

The inclusion of BESS in both portfolios addresses a key challenge in renewable-heavy grids: intermittency. By pairing solar/wind projects with battery storage, TotalEnergies ensures consistent power supply even during low-generation periods. In the Dominican Republic, BESS will integrate with solar plants to smooth out output, while Puerto Rico's storage projects (1,140 MWh) can provide emergency backup for critical infrastructure. This dual focus on generation and storage positions TTE ahead of competitors in regions where grid modernization is a priority.

PPA-Backed Cash Flows: A Low-Risk Revenue Stream

The long-term PPAs underpinning these projects are a goldmine for investors. With 2.5 TWh/year of renewable electricity projected from the Caribbean portfolio, TotalEnergies locks in predictable revenue streams, reducing exposure to volatile spot markets. This contrasts sharply with pure-play renewable developers, whose cash flows are more variable. The stability of these agreements also aligns with TTE's broader strategy of diversifying its energy mix—a critical factor in its 12% profitability target for the electricity segment by 2025.

Why the Caribbean Matters: A Scalable Model

The Caribbean is a microcosm of global energy transition trends: high energy costs, aging infrastructure, and a push for decarbonization. TotalEnergies' integrated approach—combining LNG, renewables, and storage—creates a replicable blueprint for other markets. BP and Equinor, while strong in Europe, lack TTE's Caribbean foothold and LNG-renewables synergy. This regional focus gives TTE a first-mover advantage, particularly in markets like the Dominican Republic and Puerto Rico, where energy demand is growing at 3-4% annually and renewables penetration is still low.

Investment Analysis: Buy on Dips, Target 35 GW Milestone

TotalEnergies' Zacks Rank #3 (Hold) understates its long-term potential. The stock has outperformed peers by 7.5% YTD, reflecting market confidence in its renewable execution. Key catalysts ahead include:
1. 2025 Capacity Milestone: Achieving 35 GW would validate its strategy, potentially driving valuation upgrades.
2. BESS and PPA Announcements: Further grid contracts could boost visibility.
3. LNG-Renewables Synergy: The Dominican LNG plant's 2027 launch will showcase the model's viability.

Recommendation: Buy TTE on dips below $55/share (as of June 2025), targeting $65 by end-2025. The stock's 14.2x EV/EBITDA is reasonable given its growth trajectory, and its 2.8% dividend yield adds stability.

Conclusion

TotalEnergies' Caribbean expansion isn't just about adding capacity—it's about building a profitable, replicable model that blends renewables, storage, and LNG. With its 35 GW target achievable and peers lagging in regional integration, TTE is poised to lead the Caribbean's energy transition. For investors, this is a buy-and-hold story, especially with the stock undervalued relative to its growth prospects.