March 12, 2019 Read More →

Shell sets goal of becoming world’s largest power company

Bloomberg:

Royal Dutch Shell Plc plans to become the world’s biggest power company within 15 years, a move that suggests it sees climate change as a bigger threat to its business than electricity’s historically weak returns.

The world’s No. 2 oil explorer by market value is spending as much as $2 billion a year on its new-energies division, mainly to grow in a power sector it sees delivering 8 to 12 percent annual returns, according to Maarten Wetselaar, director of Shell’s integrated gas and new-energies unit.

“We believe we can be the largest electricity power company in the world in the early 2030s,” Wetselaar said in an interview with Bloomberg Television on Monday. “We are not interested in the power business because we like what we saw in the last 20 years; we are interested because we think we like what we see in the next 20 years.”

Investors are putting pressure on companies to protect their business from a shift to lower-carbon fuels, driven by new laws and consumer choices. That pressure is especially acute in Europe, where Norway’s Finance Ministry last week instructed its $1 trillion sovereign wealth fund to divest some oil and gas companies to shield it from a “permanent decline” in crude prices.

The region’s biggest oil majors, such as Shell, BP Plc and Total SA, were spared in the decision, partly because they’re bolstering their investments in renewables. Besides Shell’s move toward power, BP has purchased the U.K.’s biggest car-charging company, while Total has bought electricity provider Direct Energie. They’ve also invested in solar and wind-power production.

For Shell, the electricity business is still in an experimental phase. Last month, the vice president of its new-energies unit, Mark Gainsborough, declined to estimate when it’ll achieve higher returns, but indicated it will introduce new combinations of power products that are more profitable than those from a traditional utility.

More: Shell says it can be world’s top power producer and profit

 

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