Go­ing green grad­u­ally

The world’s oil giants are step­ping up the pace of clean en­ergy deals.

Houston Chronicle Sunday - - BUSINESS - By Anna Hirten­stein

“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.

Hous­ton Chron­i­cle file

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.

John Daven­port / San An­to­nio Ex­press-News file

So­lar ac­counted for the big­gest num­ber of projects backed by oil com­pa­nies last year, ac­cord­ing to Bloomberg New En­ergy Fi­nance’s re­search.

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