Over the weekend Shell, Europe’s largest oil company, quietly established a separate division to invest in renewable and low-carbon power, The Guardian has reported.
Shell New Energies bring its existing hydrogen, biofuels and electrical activities under the one roof, and will also drive a renewed push into wind energy.
With $US1.7 billion ($A2.3 billion) of capital investment attached to it and annual capital expenditure of $200 million the unit will be run alongside the Integrated Gas division, but that is just 1% of Shell’s annual budget.
Under former CEO Jeroen van der Veer, Shell had previously dabbled in solar and wind, but sold its solar operations in 2006 and retains interests in nine wind projects in North America and Europe for which investment was suspended in 2009.
In recent weeks ExxonMobil has partnered with FuelCell Energy to assess ways of cutting the cost of cutting emissions from new and existing fossil fuel plants, Total has outlaid more than $1 billion to purchase battery maker Saft Groupe to complement its significant solar business, and US pipeline giant Enbridge has agreed to pay $282 million for 50% in offshore wind farms off the French coast with Denmark’s Dong Energy, which follows a $750 million a 25% stake in E.ON’s 400 megawatt Rampion project off the coast of England.
Enbridge plans to spend $5 billion to double its renewable energy capacity by 2030.
Locally, Origin Energy and AGL Energy are heavily investing in solar and wind.
Relevance
Analysts say the recent spate of investments in renewables show the supermajors recognise the potential for growth in low-carbon sources of energy.
And while the size of their clean energy investments pale beside their hydrocarbon hunting budgets, with increasing pressure in the world to adopt emissions-free generation, it appears to represent a broader push by oil companies at large to diversify their clean energy holdings.
Oil companies are not the only traditional energy players pushing into clean power: France's Engie said last week it was buying an 80% stake in California storage company Green Charge Networks.
Petroleum giants first began investing in clean energy as early as the 1970s, when the oil crisis prompted ExxonMobil to explore solar’s potential, and in the 1990s BP attempted to rebrand itself as a company looking “beyond petroleum”, before, as with Shell, they all redoubled their efforts in developing oil and gas resources.
Between 2005 and 2013 oil majors invested more than $US9.4 billion on ethanol and other plant-based fuels, according to Bloomberg New Energy Finance, but recent moves to restrict CO2 emissions globally is driving renewables growth, and when energy sources shift Big Oil always wants a slice.
Renewables were the biggest source of new power added to US electrical grids last year, outpacing coal and gas, and global solar capacity is projected to double by the end of 2018, and wind power will increase by 50%.
The US Energy Information Agency this week said renewables are the world's fastest-growing energy source, with renewable energy consumption projected to by an average 2.6% per annum out to 2040, largely at the expense of coal.
Australia
In Australia, the growth in renewables is largely being undertaken to meet the RET, which was reduced a year ago amid much political wrangling between the then-Abbott government, Labor and the Greens, from 41,000 gigawatt hours to 33,000GWh.
At that level Australia aims to generate around 23.5% of its energy needs from renewables.
In its annual report the Clean Energy Regulator found that progress in 2015 was "adequate under the circumstances" and the large-scale RET in 2020 is "achievable".
It also found no indication that the impact on household electricity bills in 2015 was more than anticipated when the target was amended.
There is also an accompanying small-scale RET, aiming to encourage additional electricity supply from small scale systems, though with no specific target.
Australia accredited 41 renewable energy projects in 2015 with a combined capacity of 296MW, of which 38 were commercial and industrial-scale with capacity less than 10MW.
The regulator noted that these figures reflected the relatively short period of time since the new target was legislated and the observed slowdown in investment while the target remained under review, with few final investments taken for wind and solar until the RET impasse was solved.
The regulator expects Australia to meet its RET given there is around 9GW of large-scale renewables projects have development approval, and just 60% need to be built to hit its target.
Solar projects accounted for the majority of approved developments for the second year running, with the total capacity of large-scale solar projects standing at 172MW in 2015, roughly tripling the amount of cumulative capacity in 2014.
Meanwhile, the rate of uptake of solar panel installations on commercial and industrial sites also increased. Demand for household solar installations also “remained solid”
In 2015 some 15.2 million MWh was generated from large-scale renewable sources, enough to power the equivalent of around 2.4 million average Australian homes for a year.
Some 8.9 million MWh of electricity was generated or displaced as a result of small-scale renewable sources, enough to power around 1.4 million homes.
Australia’s small-scale systems saw a strong year, with 188,902 new systems installed during the year, with a 12% average increase since 2014, and a doubling of capacity since 2011.
Of these, 137,468 were solar panel systems, 42,525 were solar water heater installations, another 8,898 were air source heat pumps, and 11 small-scale wind.
