Expectations that Big Oil will increasingly move into renewables have been growing as crude prices
continue to stagnate and 2017 will see more “old” energy developers begin to detail their play books
for wind, solar and storage.
Many eyes will be on Shell this year. The Dutch-Anglo petroleum giant has been angling to bring its
offshore oil and gas project nous – and capital (in the ‘crisis’ of 2015, it still had revenues of $265bn)
– to bear on offshore wind. After failing at the first attempt it now has a chance to wet its head on a
lead-off project: the 680MW Borssele 3&4 zone off the Netherlands, which it won with a low bid of
€54.50/MWh ($57.85/MWh).
Chief executive Ben van Beurden last year admitted regret at having pulled out from its earlier
position in offshore wind – apart from a share in the 108MW Egmond aan Zeewind farm
commissioned in 2006 in the Dutch North Sea – and Shell’s chief energy advisor Wim Thomas told
Recharge “the penny has now dropped that this is the new business space [to be committed to]”.
So anticipate more forward strides from Shell in offshore wind in 2017 – and not just on
conventional projects. Shell also has stakes in WindFloat, the floating wind power unit now edging
towards a first array off Portugal, and even a high-altitude wind energy outfit called KPS, which has a technology development timeline that will see its kite-driven concept flying offshore by the end of
the decade.
Total, the French oil company, has shown a commitment to industrial-scale renewables since
buying a majority stake in SunPower in 2011. But it was its fell-swoop takeover of battery maker Saft
as its “spearhead in electricity storage” that has nailed its solar-plus-storage colours to the mast.
Total chief executive Patrick Pouyanné has made no secret of its renewables ambitions: a top-three
solar player within 20 years.
Total is paying the price for its faith. On top of the $1bn deal for Saft, it has had to ride to the rescue
of SunPower – after a doubling of the solar giant’s 2016 net loss guidance – with a first aid package
that included a cash up-front order for 150MW of PV panels, and “discussions” to buy stakes in
SunPower projects in Japan, South Africa, and France.
Total has also developed a venture capital-fuelled technology scouting programme, under the
banner of Total Energy Ventures. Look to see more investment in start-ups in 2017, such as US wind
leasing specialist United wind, and AutoGrid, a California-based digital grid management solution
developer.
The Petroleum Age is ending and Big Oil knows it: investment in renewables has eclipsed that going
into oil and gas for the second year running, fuelled by the latest $310bn spend.
Some oil and gas majors are already on their way. Danish state oil and gas company Dong has
begun divesting petro-assets in favour of wind and now has a pace-setting 4.4GW under
construction off Europe, and virgin acreage off the US – and no interest in the tail-end of North Sea’s
black gold bonanza.
Its Norwegian counterpart Statoil will witness a watershed year for its renewable energy business as
its second conventional offshore North Sea wind farm, the 402MW Dudgeon, comes online as does
its 30MW Buchan Deep project – the world’s first floating array. It will also start work on its
recently won 1GW zone off New York state.
Statoil's' own venture capital arm will in the meantime get to grips with its flagship solar power
investment, part of an $8m package backing commercialisation of Oxford Photovoltaics ultrahighefficiency
perovskite-based PV technology.
Even Italy's Eni – a company that until now had shown little interest in renewables, bar a
partnership in a floating wind scheme designed to pump more oil and gas out of offshore fields –
has wheels turning on plans to jointly develop large-scale renewables with US industrial giant GE
under a framework agreement that encompasses onshore and offshore wind, as well as solar.
The shadow of stranded assets may be growing ever-longer, but for Big Oil investment prospects are
also getting darker by the day. Fitch Ratings pointedly warned last year that failing to diversify into
renewables could damage access to capital as global demand for petroleum slows.
Renewables are no longer a "nice to have", they are a existential need.
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