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Why One Big Oil Outfit Is Spending $1.4 Billion on Solar

Big Oil -- with its cash and global reach -- has surfaced as an important lifeline for emerging renewable technologies like solar and wind. Typically these minuscule ventures can come off as vacuous investment dabbling or a big greenwashing ploy. But it's not always the case.

Take oil major Total (TOT). The French company agreed last week to make an $1.38 billion investment in SunPower, the second-biggest solar panel maker in the United States. Hardly small change, even for Big Oil.

SunPower gets to tap Total's coffers to expand its manufacturing footprint and cut power plant construction costs. It's the kind of competitive edge Western solar companies need in order to survive. But what does Total get out of this?

Oil and sunlight do mix, it turns out
Environmental kudos? Hardly. Total is still an oil company. But ever since Christophe de Margerie took over as CEO in 2007, the company has made a point of diversifying because the days of easy-to-access oil are gone. Which leaves U.S. and international oil majors with these choices: Work in technologically complex areas like the deep waters of the Gulf of Mexico; in costly areas that have may serious future environmental complications, like Canada's oil sands; or in politically unstable regions that ooze with protectionist measures.

So, some companies like Total are beginning the very long process of adding to their fossil fuel-centric world. Phillippe Boisseau, the president of Total's gas and power division explains the reasoning to Greentech Media. Note the dig at BP.

We were not beyond petroleum but on top of petroleum. Oil and gas cannot meet the demand alone.
In short, Total views solar as a hedge. Not only is Total making billions in revenue on high crude prices. It stands to benefit on the back end as well because expensive oil tends to make renewable energy sources more attractive. Total, which has already own two solar companies, plans to consolidate all of these renewable assets under SunPower once the deal is approved. That doesn't mean Total is throwing money at any solar company that stumbles into view. Total's plan was to move beyond venture investments and find an established partner like SunPower to make a more aggressive move into solar, according to Greentech Media.

Total, by the way, isn't the first oil company to invest in solar. A Chevron (CVX) subsidiary, Chevron Energy Solutions, builds and finances dozens of solar installation projects across the U.S. And its venture capital arm has invested in solar firm BrightSource Energy. BP also has invested in Brightsource. Although it should be noted that BP and Shell (RDS) have reduced involvement in solar and are more interested in wind and biomass these days.

Photo from SunPower

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