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Shell stealthily seeks a green future

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

 

Shell is looking for a green future in silence

How should Shell still make money if the role of fossil fuels becomes smaller and smaller? The company is sorting out with investments in green start-ups.

Beeldbewerking FD studio

Bert van Dijk

The construction of a large wind farm in the North Sea, an offer for Eneco and the acquisition of the charging station company NewMotion; it is the big steps that everyone can see that oil and gas multinational Shell is putting to a little less fossil. But under the bonnet of Shell and out of view of the general public, many smaller investments in start-ups give at least as interesting an insight into Shell’s view of the future. A search for the green future of Shell.

The growing number of solar and wind parks in the world makes it increasingly complex to keep the supply of electricity in balance with demand. Previously, a limited number of large power plants were sufficient for the supply of electricity to businesses and households. The demand was well predictable and it was one-way traffic: power flowed from the power station to the end user.

Charge and discharge batteries

But the energy transition turns this central delivery model upside down. Households and businesses will generate electricity themselves with solar panels and windmills, and the growing number of electric cars means that the batteries in those cars will not only be recharged, but also drained if there is a demand for them.

Keeping in balance and connecting each other to generated electricity and demanded power becomes a lot more complicated. Especially because windmills and solar panels can not produce electricity on demand. This only happens when the wind is blowing or the sun is shining.

The American company Autogrid has developed technology and software for this problem. The software can predict, on the basis of large amounts of data, when and where demand for electricity arises and which subsequently link to available supply.

Autogrid is a start-up of the new generation in Silicon Valley that operates on the cutting edge of energy and technology. Ample is another example. The San Francisco company has developed a technology that can replace the battery of electric cars at lightning speed, eliminating time-consuming charging. Growing Energy Labs, also from the Silicon Vally region, connects batteries via software to smart solar energy networks.

The common denominator of these start-ups is that Shell invests in it.

Do not hang on the big clock

The Shell Ventures investment arm will put money into a large number of young companies that are developing technologies for the energy system of the future. These investments are anything but secret, but Shell does not hang them on the big clock either. From time to time an investment seeps through a press release about a financing round of such a start-up and Shell emerges as one of the participants. Shell Ventures invests in a wide range of companies, also in the field of oil and gas innovation.

But at the same time Shell invests more and more in other, cleaner forms of energy. For the time being, marginal amounts are involved every year compared to the tens of billions that Shell invests in oil and gas activities, but the company has expressed the ambition to double its investments in new energy forms to $ 4 billion per year. The fact that Shell Ventures was housed a few years ago in the new New Energies division underlines that the focus is on looking for companies and technologies that can lead Shell into the future. By investing millions in state-of-the-art start-up technology, Shell can learn, keep in touch with the market and test new revenue models.

Shell not only invests directly in start-ups, but also puts money into investment funds that invest in start-ups, such as the Amsterdam-based SET Ventures. René Savelsberg, managing partner of SET, is happy with Shell as an investor. ‘They get access to dealflow and keep in touch with the latest technologies and start-ups, which they might not normally see so quickly. Moreover, we are a kind of shock absorber between the start-up and Shell. Shell also invests directly in small companies, but for some it is too early to directly attract Shell as a shareholder. They prefer to go first with an independent fund, like ours. ‘

Stroommarkt

Shell therefore bets on different horses. Linking supply and demand in the future electricity market is an important pillar, as it turns out. It fits Shell’s strategy to grow into an important electricity supplier in the future.

‘We go from an energy system dominated by molecules to an energy system that is dominated by electrons’, said Maarten Wetselaar last year in a conversation with this newspaper. The director of Shells New Energies division expects that the share of electricity in the energy system will increase to 50% to 60%, partly because homes and factories will replace natural gas with electricity.

Competitor of Tesla

And so the company sorts for that by investing in technologies such as Autogrid, Growing Energy Labs and German Sonnen, which has developed a home battery and competes with the Tesla powerwall.

With this, Shell is also getting closer to the end user. Shell also invests in the American Innowatts, a start-up that develops smart meters. ‘Before Shell invested in us, Carl Stjernfeldt of Shell Ventures took the time to not only get to know our company, but also our vision. A start-up has to look for smart investors at the beginning of its existence and not look for just “stupid money”, says founder and CEO Siddhartha Sachdeva of Innowatts against the FD.

‘Money only brings you to a certain point, but investors who share your vision can be a real growth catalyst. Shell not only challenges us to think out of the box during board meetings, but also thinks with us where we can discover synergy with them, to grow our activities. ‘

They also experience this at Axiom, an American start-up that develops batteries, which can save a lot of energy in supermarkets. “Shell helps us by bringing us into contact with several of their business units and their customers,” says Axiom spokesperson. ‘This allows us to scale up faster.’

Ample

Not only do houses and companies gradually say goodbye to fossil fuels, cars are also becoming electric. That is why Shell invests in charging station operators, took over NewMotion and invested it in companies such as Ample.

Shell is also more interested in the mobility sector. After all, how will the multinational earn money when cars no longer need petrol and drive autonomously?

Self-driving cars

For example, the company has developed an app, Farepilot, with which drivers of taxi services such as Uber can find customers more easily. This is done by predicting places where many people need a taxi. On the basis of real-time information, intelligent software sends a driver to an event, for example, ten minutes before it ends.

Shell hopes that in the future it will also be able to focus on self-driving cars. The company even invests in start-ups that have developed a sort of marketplace for car maintenance.

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