Going green gradually
The world’s oil giants are stepping up the pace of clean energy deals.
“This reflects their underpinning strateg y to test out new ideas and businesses.” Richard Chatterton, analyst
The world’s biggest oil companies are closing more clean energy deals as pressure to diversify their businesses mounts and growth accelerates among green technologies.
Oil majors more than doubled the number of acquisitions, project investments and venture capital stakes, to 44 in 2016 from 21 the year before, according to research published by Bloomberg New Energy Finance. In the last 15 years, they’ve completed 428 transactions and spent $6.2 billion building stakes in clean energy companies.
“This reflects their underpinning strategy to test out new ideas and businesses,” said Richard Chatterton, one of the London-based analysts who authored the report. “The international oil companies are identifying opportunities and building expertise, and when a commercial opportunity becomes clear, they will invest at scale.”
To be sure, the sums expended on clean energy still represent a fraction of the money invested in crude every year, showing that the oil majors are still very much focused on their core business. Some investments by oil majors in projects and startups aren’t disclosed, according to BNEF, which estimates that the clean energy industry attracted almost $290 billion in 2016.
Royal Dutch Shell, the Anglo-Dutch oil major, and the British company BP operate wind farms in West Texas. Solar energy, however, generated the largest number of projects backed by oil companies.
Wind created the second-highest volume of deals, with offshore wind investments beginning to catch up with windmills stationed on land. Oil companies have been looking to leverage their know-how in extracting fossil fuels from seabeds to install turbines in similarly harsh climates.
Wind projects offshore also tend to be some of the largest-scale and riskiest in the renewable energy industry, leading to higher profitability. Shell has a stake in the Borssele III and IV wind projects in the Dutch North Sea, and Statoil developed the world’s first floating wind farm off northern Scotland.
Interest in biofuels is on the decline, the data showed, having peaked when oil prices were high. After the oil price crash that began in the middle of 2014, investment has flowed out of the sector. The deal count was zero in 2017.
Total has concluded the highest number of acquisitions and joint ventures with clean energy companies, buoyed by its purchases of a majority stake in SunPower Corp. in 2011 and battery maker Saft Groupe last year. Europe’s secondlargest oil and gas producer is also active in the venture capital space, with a focus on companies in the U.S.
Oil majors’ venture capital deals have been shifting toward power storage and digital technologies. Advanced mobility may also be emerging, as companies seek to evolve as more transportation eschews gasoline for electricity. Shell recently bought NewMotion, an electric vehicle charging point network.
BP and Royal Dutch Shell operate wind farms in West Texas. Oil majors have done 428 transactions and spent $6.2 billion building stakes in clean energy companies over the past 15 years.
Solar accounted for the biggest number of projects backed by oil companies last year, according to Bloomberg New Energy Finance’s research.