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Shell invests more than other oil multinationals in sustainable energy

Shell took a stake in the US solar developer Silicon Ranch this week. It is already the fifth major investment of the New Energies component in more than six months.

Printed below is an English translation of an article published today by the Dutch equivalent of the Financial Times, Financieele Dagblad

Shell took a stake in the US solar developer Silicon Ranch this week. Photo: Silicon Ranch

Shell is stealthily getting a bit green

Gert van der Have Bert van Dijk • Entrepreneurship

Shell took a stake in the US solar developer Silicon Ranch this week. It is already the fifth major investment of the New Energies component in more than six months.

Shell is synonymous with oil tankers, refineries, drilling platforms, gas installations and petrol pumps for most Dutch people. Not surprising, because that was and is Shell and Shell will still be for a time. But at the same time, the Dutch-British group is investing faster in new, cleaner forms of energy; it sees that societies, politicians and climate agreements limit the margin of maneuver of fossil fuels ever further.

Shell follows what it calls itself New Energies, a two-track policy: fossil and sustainable. The fossil track is based on the conviction that the world cannot do without fossil fuels in the coming decades. Despite all investments in cleaner forms of energy worldwide, the demand for oil and gas is increasing every year. That is why Shell will continue to invest billions of dollars in existing and new oil and gas fields in the deep sea and in shale, in chemical plants and in refineries.

Investments in renewable energy are doubled

The second track, that of renewable energy, consists of investments in wind farms, solar power plants, hydrogen and biofuels. CEO Ben van Beurden announced at the end of last year that the investments for the business unit would be doubled to $ 2 billion per year until 2020. With this, Shell invests more than other oil multinationals in sustainable energy, even though Shell’s total investment budget of $ 25 billion per still modest.

In 2016, Shell gave a first impulse to expand its New Energies. In 2016, the oil and gas company won the tender for a large offshore wind farm off the coast of Borssele with partners Eneco, Van Oord and MHI Vestas.

Then the sustainable transfer machine really went up. A string of companies has been taken over by stringing beads and essential interests have been taken in green companies. This gradually gives the fossil face of Shell a green glow.

Electric charging points

For example, in June 2017, the company purchased the American MP2 Energy, which manages a number of gas-fired power plants and solar and wind farms from which it supplies electricity to private individuals and companies. In the same month, through the business unit investing in young companies, Shell acquired an interest in Singapore’s Sunseap, which supplies solar power to large customers in Singapore, including Apple, and wants to expand with Shell in the rest of Asia.

In October followed the acquisition by Shell of the Dutch company NewMotion, one of Europe’s largest suppliers of electric charging points. Just like Sunseap, Shell wants to expand the company substantially in the coming years. The Amsterdam company has a lot of charging points and customers, especially in the Netherlands, but the company also wants to gain a foothold in other countries. With Shell as owner, the company gets more means to expand, for example for investments.

Contact with the user

Another two months later, Shell struck again through the acquisition of First Utility. The company, founded in 2008, supplies gas, electricity and broadband services to 825,000 British households. Shell says through First Utility, which employs 1,500 people, that it can expand the existing energy supply to commercial and industrial customers with the domestic sector.

With the increasing electrification and decentralization of the energy sector, large power plants are being replaced by small units working for a local group of customers. Shell must pass by the door of the user, as it were. It does this with charging stations for electric cars in Europe and an extensive network of gas stations for hydrogen in Germany.

‘Increasing electrification and digitization offers new opportunities for Shell to be able to develop electricity and gas for people at home (appliances and heating) and on the road (charging stations) to their consumption,’ wrote Mark Gainsborough, the top boss of New Energies at Shell, end last year on his blog. According to him, that electrification of the economy requires a combination of renewable energy and more natural gas.

Where is the money to be made?

Gainsborough knows that he is not working at the largest part of Shell, but perhaps the most exciting, he writes: “Although it may take decades before New Energies is Shell’s main activity, it is one of the most exciting parts to to be within Shell ‘.

Topman Van Beurden emphasizes time and time again to act cautiously and to take time to learn how different new forms of energy will relate to each other in the future. And more importantly, where there is money to be made with new revenue models. Shell will not do a takeover of a manufacturer of windmills or solar panels, but perhaps from developers with extensive ‘green’ energy interests and direct contact with large industrial customers and private individuals.

For example, Shell is invariably mentioned in the corridors as one of the candidates to take over the Dutch energy company Eneco. Eneco prides itself on its far-reaching greening, including through wind farms. With an estimated enterprise value of almost $ 3 billion, the Rotterdam-based company is easy to handle for Shell, but the company does not want to indicate whether it is actually interested.

Hello customer

Large power plants are replaced by small units working for a local group of customers. Shell must pass by the door of the user, as it were.

 

‘New Energies is een van de meest opwindende onderdelen binnen Shell aan het worden’

• Mark Gainsborough, topman Shell New Energies

DUTCH SOURCE ARTICLE WITH GRAPHICS

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