Shell increasingly betting on electricity
Dutch oil concern Shell increasingly sees opportunities in the electricity market. This week it applied for a permit to provide companies in the UK with electricity. Shell already does that in Germany and Italy and since the beginning of this year in Turkey.
From 2018 on Shell will not only deliver electricity to several companies in the UK, it will also provide the electricity for its own 600 outlets, offices and oil- and gas platforms in the UK. Meanwhile Shell took a part in MP2 Energy in the US, which owns a few wind- and solar farms, and in Sunseap that delivers solar power in Singapore to clients like Apple, among others.
It’s not clear yet what are the exact intentions of Shell. “We want to grow in the European electricity market, but it is in an early stage and we’re looking at the possibilities”, says a Shell spokesman. CEO Ben van Beurden said earlier the company is searching for good profit models in this market, seeing a roll for gas too. Today there is simply not enough ‘green electricity’ to be offered exclusively to companies.
Shell expects the part of ‘green electricity’ will grow and is investing in its own wind farms, like the one offshore of Borssele. It also bets on big industrial companies wanting a so called ‘power purchase agreement” with the electricity delivered directly from a specific power house, mostly wind or solar energy.
Google and Eneco
For the supplier, these agreements are interesting because they are long term and make an investment in a wind- or solar power farm more profitable. An example of such an agreement is the one Google made with Eneco in 2014 for its data centers in the Netherlands. For the next ten years all power from the Eneco wind farm in Delfzijl Noord goes to Google, as it is the case for a solar farm of Eneco too, since the beginning of this year.
Contracts like this exists for some time already, but they are booming recently according to Bloomberg New Energy Finance. In a report from 2016 it writes that more then 4 gigawatts of renewable energy was delivered to companies. Three years ago this was only 1 gigawatt.
According to the researchers this growth is due to falling prices for wind- and solar energy, becoming as cheap or even cheaper than electricity out of fossil fuels. Lots of companies want to become more sustainable and they can do that without an extra cost.