oil industry renewable energy growth strategy

Renewable energy projects

The oil industry may be committing up to a fifth of their total investment in green energy projects after 2030 as hydrocarbons production declines.

A growing number of key oil and gas players are starting to invest in renewable energy projects. Analysis from Wood Mackenzie suggests that major energy companies like Royal Dutch Shell, Total, BP and Statoil among others will invest hundreds of billions of dollars in wind, solar and energy storage projects in the coming decades.

Momentum

“The momentum behind these renewable technologies is unstoppable now,” said Valentina Kretzschmar, director of research at Wood Mackenzie. “The oil industry recognising it is a megatrend; it’s not a fad, it’s not going away. There is definitely a risk to their core business.”

Wood Mackenzie has predicted that demand for renewables will grow significantly faster than oil over the next couple of decades. While oil is predicted to grow at 0.5%, annual growth rates for wind will be 6%, while solar will grow at 11%.

Rethinking strategies

Wind and solar energy are poised to radically reshape the energy market over the coming decades. This will present a threat to legacy oil and gas operations, but also an opportunity to diversify and future-proof portfolios,” Wood Mackenzie stated. “The oil industry Majors are starting to rethink their strategies. But how fast and to what extent will the shift to renewable energy unfold? The case for the Majors to build a renewables position is increasingly compelling. A niche energy market now, renewables will be much bigger by the middle of the next decade, as oil and gas demand growth slows.”

The report said: “A potential tipping point for the shift into wind and solar could be an anticipated decline in the Majors’ hydrocarbon production. With new resources needed to sustain volumes beyond 2025, wind and solar could step in to the breach if discovered resource commercialisation, M&A and exploration fail to deliver, or economics weigh against continued development.”

Oil industry investments in renewables

In March, Shell announced that it was planning to dramatically increase its investment in renewable energy. A raise up to $1 billion a year by the end of the decade. In February last year, Statoil announced a $200 million renewables investment fund. This investment fund would be used to finance projects in Europe and the U.S. The company is also behind the world’s first floating offshore wind project, the 30-megawatt (MW) Hywind Scotland project.

Source: Industrial Info Resources – 20 June 2017