Shell studies green energy
deals to prepare for future after oil
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[November 30, 2016]
By Karolin Schaps and Ron Bousso
LONDON
(Reuters) - Royal Dutch Shell, the world's second-biggest publicly
listed oil company, is studying acquisitions in the green energy sector,
its CEO told Reuters, as it bows to shareholder demands for a strategy
beyond fossil fuels.
Shell, which has a market value of $200 billion, produces two percent of
the world's oil and gas but rapid technological change coupled with
policies to protect the climate have kick-started a shift in energy
markets that has put enormous pressure on oil companies to plan for a
time after fossil fuels.
"The idea that you can just be a very clever observer and step in when
the moment is right, forget about it," Shell Chief Executive Ben van
Beurden told Reuters.
"I am convinced that in this space we will play an active role, a
leading role and we will plan acquisitions in it."
Major investors, including Dutch pension fund PGGM, have criticised
Shell's climate change policies in the past, saying the company should
do more to mitigate climate change risks.
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"We don't just want them to pay lip service and do it because the
industry is under pressure," said Rohan Murphy, co-manager of Allianz'
Global Energy Fund, a Shell shareholder.
"Shell do seem to be taking the issue of a less hydrocarbon dependent
world seriously and are looking at it properly rather than just talking
about becoming greener," Murphy said.
Shell owns about 500 megawatts (MW) of onshore wind power capacity in
the United States and has a growing biofuels business in Brazil which
produces ethanol from sugar that is mixed with petrol and diesel to
reduce carbon dioxide emissions.
It also recently bid to build an offshore wind farm in the Netherlands
in a consortium with two other Dutch companies.
"Of course we do believe in renewables but probably more in building the
utilities and integrating them into our existing operations," van
Beurden said.
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A Shell oil and gas sign is pictured near Nowshera, Pakistan's
northwest Khyber-Pakhtunkhwa Province September 8, 2010. REUTERS/Morteza
Nikoubazl/File Photo
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That is where Shell's strategy appears to diverge from French oil
company Total, which is often referred to as one of the most progressive
oil company when it comes to moving away from fossil fuels.
Earlier this year, Total splashed out $1.1 billion to buy Saft, which
makes batteries to store solar energy, and bought a stake in AutoGrid, a
startup that has developed a platform to optimize the use of home energy
appliances.
Total is also majority shareholder in SunPower, a manufacturer of highly
efficient solar panels.
While Total is focusing on investment in green energy technologies, van
Beurden hinted that Shell would become an electricity and gas provider,
through the integration of utilities. He said there may be value in
delivering a service, rather than being the owner of a technology.
In Britain, so-called demand aggregation is already a profitable
business model. Aggregators secure commitments from businesses to cut
their energy consumption and in return earn a fee from the network
operator.
(Editing by David Clarke)
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