Shell plans to becomes world’s largest power firm

SHELL is set to become one of the largest power companies in the world, its Director of New Energies has said, as its emissions target forces the company to evolve away from oil and gas.

Speaking to Bloomberg on the sidelines of an energy conference in the US last week, Maarten Wetselaar, Shell’s Integrated Gas and New Energies Director, said: “We believe we can be the largest electricity power company in the world in the early 2030s.” And to Financial Times he said that for Shell to achieve the goal it set in December to cut emissions by 20% by 2035 “the amount of power – of clean power – we will need to be selling…will make us by far the biggest power company in the world.”

Asked how shareholders might respond to the lower returns from power compared to oil and gas, he said: “We are not interested in the power sector because of what we saw in the last 20 years, we are interested because we think we like what we see in the next 20 years…where we believe by optimising and trading we can make better returns than the industry has done so far.”

As well as power trading, Wetselaar said the company will invest in generation from renewable sources, including solar and wind at industrial- and domestic-scale; hydrogen fuels; electric vehicle charging; and home battery storage. It has no plans to enter the transmission portion of the supply chain or generation from coal or nuclear. It will also consider building gas plants to help balance intermittent supplies from its renewables.

To help meet these ambitions, he said the company plans to spend US$1bn–2bn/y on its new energy technologies. While this is dwarfed by the group’s total US$25bn/y budget for capital expenditure, he said that the plan will be to prove it can make between 8–12% returns in power before scaling up investment.

“Electrification is the biggest trend in energy in the coming 10–15 years because it is by far the easiest way to decarbonise energy usage. So, we think the power market will grow a lot, faster than any of the other energy markets,” he told Bloomberg.

Shell’s new energies business has invested in projects throughout the power supply chain. Last year it took stakes in wind farms being developed off the US and Netherlands, and last week it opened a 27 MW solar project to provide power for its Moerdijk chemical plant in the Netherlands. On transport, it is part of joint venture that is installing hydrogen fuelling pumps at 100 locations across Germany; and in January entered the US electric vehicle charging market with its purchase of Greenlots. On the domestic front it purchased UK household energy provider First Utility in February 2018; and last month bought German home energy storage battery technology firm sonnen.