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Energy Energy Policy Eniday Investment

Oil majors and the world of utilities

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Facing the prospect of a 25 percent increase in global electricity consumption, with bigger roles for gas, renewable power, and electric vehicles gradually replacing petrol and diesel, big oil companies are now diversifying into Europe’s power sector…

BP, Eni, Shell, Statoil and Total are taking steps to compete in Europe’s power sector, a market that has seen little real competition for decades. This is a move that should be welcomed by electricity consumers.

Why the interest?

Growing interest in power generation and delivery owes much to big oil company’s need to find new customers, as peak oil is forecast to arrive as early as the late 2030s by BP’s Energy Outlook 2018. The rate of increase in demand for oil is already beginning to slow as energy efficiency takes hold, renewable energy increases its market penetration and electric vehicles (EV) increase from around 3 million today. The falling cost of wind, solar and energy storage together with international commitment to cut greenhouse gases is turning renewable energy investment into a normal commercial proposition. Indeed, investment into fossil fuels is losing its luster to renewable energy, as seen by investors such as the New York Pension Fund, World Bank and Norway’s $1 trillion sovereign wealth fund announce planned divestments in fossil fuels.

Examples of Power Generation Investment

A few examples of recent investment in Europe’s power sector are outlined below, starting with Royal Dutch Shell with the highest presence in Europe’s power markets.

Royal Dutch Shell

Present in 14 of Europe’s power markets, Shell Energy Europe is continuing its market penetration into renewable power by way of a series of acquisitions. It already offtakes renewable power from wind farms and solar parks in Great Britain and mainland Europe but has increased its presence with the $217 million purchase of a 44 percent stake in Silicon Ranch Corporation, which operates solar and wind farms across the U.S. The company has also acquired a 20 percent share in the 731.5 MW Borssele offshore wind farm off the Dutch coast. In anticipation of growth in charge cards Shell recently bought New Motion, which operates more than 30,000 private electric charge points for homes and businesses in the Netherlands, Germany, France and the U.K. as well as access to some 50,000 public charge points across 25 European countries, serving more than 100,000 registered charge cards.

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