Oil and gas majors continue foray into renewable energy

WORLDWIDE: Oil and gas giant Royal Dutch Shell expects most of its planned investments in its New Energies division until 2020 to be in power generation, particularly solar, wind and gas.

Diversifying… Shell’s headquarters in The Hague, Netherlands
Diversifying… Shell’s headquarters in The Hague, Netherlands

The company reaffirmed its intention to spend $1-2 billion a year until 2020 in its Energy Transition report.

Shell set up the new energies division in 2016 to build on its experience in "lower-carbon technology" and "explore new commercial models focused on the world’s energy transition".

However, new-energies spending is still only a small slice of Shell’s total capital expenditure. The company reduced its annual capital spending from $46 billion

in 2013 to $24 billion last year, and has earmarked $25-30 billion in total annual spending until 2020.

Chad Holliday, the company’s chair, said Shell’s strengths of having a "global energy supply and trading network" and staff with "some of the best engineering and project management expertise around" can be leveraged in areas outside its traditional sectors of oil and gas.

"We are preparing for the future by using those strengths while investing in new areas of energy, whether that is wind or solar power, charging points for electric vehicles or lower-carbon biofuels," he wrote in a foreword to the report.

Shell expects global energy demand to grow during the 21st century as the world’s population exceeds ten billion and becomes more prosperous, it stated.

The company forecasts wind power demand to increase at a compound annual growth rate (CAGR) of 11.3% between 2020 and 2025, with only hydrogen (29.7%) and solar PV (20.3%) growing at a faster rate.

It predicts wind will grow at roughly 10% in 2025-40, before slowing to around 5% in the following 20 years.

It anticipates global demand for oil to decline from 2025, and demand for gas to decline after 2030.

The report comes a week after environmental group Friends of the Earth threatened Shell with legal action over its contribution to global warming.

Shell led a consortium that won a tender for the 680MW Borssele III and IV zone in the Dutch North Sea in December 2016. It has since sold a 45% stake in the project to Swiss investment manager Partners Group.

Total buys Direct Energie

French oil major Total is also continuing its diversification into renewable energies with an agreement to buy 74.33% of Direct Energie, France’s third-largest electricity supplier. Total will pay around €1.4 billion for the stake, based on €42/share. Once the deal has been completed, it will offer to buy the remaining shares at the same price.

Direct Energie bought French renewables firm Quadran in 2017. Its 1.35GW installed capacity includes 550MW of renewables, as well as a 2GW pipeline.

BP buys Tesla battery for US project

Tesla will supply a battery for a 25MW wind farm in central South Dakota owned by BP’s wind-power division. The 212kW/840kWh Tesla battery will be installed at the ten-turbine Titan 1 project in the second half of 2018, BP Wind Energy stated.

Titan 1 comprises ten 2.5MW Clipper turbines and was commissioned in 2009. This will be BP’s first battery storage project at one of its US wind farms.

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