Total agrees $1.4bn stake in SunPower

Total, the French oil and gas group, has agreed to take a majority stake in SunPower, the California solar power company, for about $1.4bn, in one of the largest-ever single investments by an oil company in renewable energy.

Total plans to buy up to 60 per cent of SunPower’s A and B shares at a price of $23.25, a 46 per cent premium to the A shares’ closing price on Wednesday.

Having floated in 2005, SunPower’s shares peaked at more than $140 in December 2007.

SunPower is the second-largest solar panel supplier in the US, and runs a vertically integrated business from manufacturing cells and panels to developing solar plants.

By taking a majority stake but maintaining SunPower’s independence, Total hopes to get the best of both worlds, using its financial strength and global reach but preserving SunPower’s culture and entrepreneurial spirit.

Solar capacity has been growing fast in the US, helped by government loan guarantees.

However, scepticism within the Republican party, which controls the House of Representatives, has fuelled concerns about the outlook for subsidies for renewable energy.

Constraints on funding following the financial crisis have also remained a problem for renewables companies. However, doubts about the safety and future of nuclear power following the reactor crisis at Fukushima in Japan have reinforced interest in wind and solar power, in spite of the challenges they face.

Tom Werner, SunPower’s chief executive, said a key element of the deal with Total was its agreement to provide up to $1bn of credit support during the next five years.

He added: “Total’s commitment and global presence will help accelerate our growth and solidify our position in the increasingly competitive solar sector.”

Many big oil companies have been investing in forms of renewable energy, such as ExxonMobil’s investment in research to produce biofuels from algae.

Christophe de Margerie, Total’s chief executive, has been one of the most outspoken big oil CEOs in making the case for investments in renewable energy.

He has taken a more pessimistic view than others in the industry about the potential for world oil supplies to increase, and has talked about wanting to position the company for a long-term future when oil runs short.