Oil giant TotalEnergies is poised to make a major move in green hydrogen, said CEO Patrick Pouyanné as he claimed the best opportunities for low-cost renewable H2 will come outside Europe.

Pouyanné said the French supermajor will “announce soon a project in [green hydrogen] at large scale” as he was quizzed by financial analysts on the prospects for using some of its booming oil & gas revenues to accelerate its energy transition plans.

The TotalEnergies boss said he was “not fully convinced” of the case for large-scale European production of H2 by wind- or solar-powered electrolysis, despite green hydrogen's enhanced role in the EU’s green agenda and the post-Ukraine REPowerEU strategy.

“If you really want to drive the green hydrogen price down you need to invest at a very large scale,” said Pouyanné.

The soon-to-be-announced project will “not be in Europe, because fundamentally we think green hydrogen is a matter of cost of electricity, so we are looking to where we could locate at very large scale with a very low cost of electricity over the long term so we can invest in this business”.

Pouyanne’s comments address one of the core debates of the emerging green hydrogen economy over the relative merits on cost and energy security grounds of locating likely smaller-scale electrolysis close to demand, or alternatively tapping the planet’s best possible wind or solar resources in desert locations in markets such as Australia, the Middle East and Chile to produce at vast volumes.

TotalEnergies’ own green hydrogen announcements so far have been at the smaller end of the scale, although Total Eren, in which it owns a minority stake, has unveiled plans for a 10GW wind project to power green hydrogen and ammonia production in Chile. The oil giant is also involved in initiatives to produce 'blue' hydrogen using abated fossil gas.

'Will to use exceptional cash flows'

Pouyanné spoke as TotalEnergies posted net profits that increased by half to $4.9bn in the first quarter of 2022, despite the company taking a $4.1bn impairment over the impact of sanctions on its Russian operations.

The company’s board has a “will… to use part of these exceptional cashflows to accelerate our strategy” within its existing parameters, said the CEO, who has set the group on course to hit 100GW of gross renewables capacity by 2030.

On the potential for more renewable energy deals of the kind that this week netted Core Solar, the 4GW US PV and storage developer, Pouyanné said “there will be more to come in the coming months, be patient”, although he stressed that the supermajor was looking for “value over volume”.

The deal for Core Solar was a matter of negotiation not competitive bidding, said the TotalEnergies chief, who said he was wary of being drawn into a bidding war for green power assets.

“I have a very strong view on this market. I said to our team, stop losing your time on competitive opportunities, because you have always in front of you financial investors who don’t have at all the same views on these type of assets.

“They have money with a negative return, so they are accepting returns far too low.”

The supermajor was better served by being “able to convince the promoter that partnering with TotalEnergies will [add value]”.