Shell Renewable Energy Investment – As investors pile up gigawatts, the Anglo-Dutch giant insists that buying, not producing, renewable energy is key to a successful energy transition.
In 2019, Shell grew to become “the world’s largest energy company” in the early 2030s, CEO Ben van Beurden and senior executives of a major Anglo-Dutch oil company.
It is unclear how Shell will measure this ambition. It’s now clear that there won’t be a ‘show me the gigawatts’ competition with fossil fuel partners like BP and Total, who are racing to accumulate hard-to-keep renewable energy — but there’s also touch. difficult questions about the costs they can hit in sectors such as offshore wind.
Instead, Shell appears to be a smart broker in the energy transition, not just in terms of “access to green electronics” – its preferred term for renewable energy – but also in sales, marketing and technology. Because? It’s called a “one stop shop” for businesses and customers.
“We want to be the strongest player in the world,” van Beurden said in 2050.
“But the focus of being the biggest energy player is buying clean energy.”
Ahead of Thursday’s strategic update, some commentators said that if Shell followed companies like BP and Total in heavy borrowing, it could compete with a 50GW portfolio by 2030, which or the French group’s 35GW in its book. later. That’s a lot in 12 months.
But not van Beurden. “We don’t believe in volumetric targets,” he told reporters, “very clearly.”
“We believe there is more value in designing products and solutions that are right for customers than in manufacturing green electronics…
“[The picture] focuses on value, not volume. We’re not saying ‘look, look at these gigawatts.’
“It’s a different story, but I believe it’s a victory story, for us in the end.
It’s not that Shell won’t invest in renewable energy projects, as van Beurden is keen to emphasize. “When we make investments, we can contribute a lot… but we don’t think we keep those investments as producers of green goods.” Instead, it’s electronic sharing.
So if Shell doesn’t get a gigawatt of power on its books, what will the power exchange group bring?
The answer is something called “value differential.” CFO Jessica Uhl has identified the 730 MW Borssele 3&4 offshore wind farm being developed in the Dutch Gulf as a minority partner of the Blauwind Group.
“[In Borssele] we can get 360MW that we sell to customers, but only $100 million capital is associated with that project,” said Uhl.
It can be sold, used to produce green hydrogen, or sold to the “Amazons and Microsofts” of the world.
Uhl said an example of Shell’s additions is helping to ensure a 24/7 supply of green energy for the entire fleet.
Well, if you want to look into the future of Shell, the electricity supply contract earlier this week to supply Amazon from another gas investment in the North, Hollandse Kust North.
The same idea of added value for biomass and hydrogen may, says van Beurden, suggest that the winning position in the future energy system “does not have the power of a good electrical machine, but rather the “opening up of the hydrogen market”. .
In addition to hydrogen, which it hopes to create a “dual energy sector” in the blue and green sectors, Shell will focus on strengthening its position in sectors such as electric vehicles, wind and chemicals.
In fact, Shell’s fossil partners are very blind to the possibilities of energy trading, energy industry and the like. BP, for example, in September last year announced its own partnership with Microsoft to provide renewable energy to data centers around the world. Other oil and gas competitors have also announced that they will seek partners to unlock the value of their assets.
But Shell’s refusal to play the credit game — which extends to failing to reduce oil production, beyond saying it’s done in 2019 — is different.
Van Beurden and his colleagues argue that the key is to reduce carbon intensity – which is why they are pursuing a path to net neutrality by 2050.
As for Capex, it plans to spend up to $3 billion a year on renovations and “energy solutions,” for a total of $23 billion in annual investments.
Another number that will benefit Shell is cost. The initial market reaction was negative – the group’s shares traded about 2% lower in London the night after the strategy update.
“The real shift is on the carbon side, with the introduction of one of the most aggressive carbon reduction plans in the industry. How this will be achieved is still unclear, given the low carbon growth targets of limited carbon,” said Jefferies analysts. .
Gabor Petroczi, managing director of natural resources at Fitch, is more optimistic, seeing Shell’s investment in “marketing, electric vehicle charging infrastructure and gas combined with little risk to the economy and profit.
“While long-term demand for ‘bridge’ products is less favorable than clean green energy projects, we see the current plan as a good balance between managing energy transition demands and job risks,” Petroczi said.
“Communities around the world are flooded and some are burned. “The government is increasing its responsibility in renewable energy, while competitors are changing, but Shell’s successful plan is to self-destruct and degrade the world,” said this environmental protection group. .ONE). ( RDS.B ) was reminded of the need to accelerate the ‘energy transition’ and prepare for a new energy world. ‘net-zero by 2050. The current crisis and uncertainty have encouraged people like Shell to look at their budgets, electricity and consider the long-term sustainability of their business model.
This new structural review will give Shell the opportunity to change some policies and some aspects of its business to be more efficient. A Shell spokesperson said:
Next month we’ll be looking at a full review of the company. Where necessary, we reshape our organization to adapt to a different emerging environment.
While this zero emission level can be achieved through a number of different methods, it can be concluded that Shell may be looking to accelerate renewable energy spending. However, Shell said it was a “difficult” investment. That offers a way out fueled by Shell’s short-term problems with oil prices, the company’s recent dividend cut and allegations of fraudulent earnings management.
Anglo-Dutch Shell has joined British oil company BP (BP) in its desire to cut costs due to increasing pressure from society and government to deal with the sky cycle. Shell wants to be a future-proof company, but it is important for the future of the company. The recent crisis has only increased these pressures. Shell cannot continue to ‘kick the can down the road’.
Shell’s hands-on approach is the most ambitious of all in the oil industry. This is important because it includes ‘Scope 3’ emissions, which include emissions produced by Shell’s oil burning customers. Success in this area allows Shell to ensure that customers have the means to eliminate their own emissions and experience total ‘net zero’. I believe that Shell’s ambitious goals are achievable and show how Shell can prepare even more for the future; however, the company must begin to act and deliver on the promises it has struggled with in the past.
As a recent Bloomberg article reports, Shell no longer wants to position itself as an oil company. After a reporter referred to Shell as an oil company, Shell CEO Ben Van Beurden responded:
In fact, in this interview, you said the wrong thing to us.
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