A new strategy for Shell

“You can be sure of Shell”, so the slogan went a few decades ago.

Reassuring TV ads featuring glossy cars gliding into filling stations emblazoned with the company’s familiar glowing golden scallop logo, were all part of a long heritage of iconic brand marketing for the road fuel giant.

These days the supermajor’s commercial message to the public is moving on fast from just forecourts.
The company, which recently proclaimed its mission to be the biggest energy company in the world by 2030, has just cranked up its profile in the UK energy retail sector. And it suddenly feels like a landmark moment for utilities.

Royal Dutch Shell’s announcement this week that it was rebranding its energy supplier First Utility to Shell Energy and switching its 700,000 households to renewable power, was one of the clearest indications yet of its market strategy in this area.

Driven by aligning challenges and opportunities – from the societal shift away from dirty fossil fuels, to electricity becoming a key direction of travel on
the energy roadmap – a power battle for market share is on. And while the lines of demarcation have already been blurring between oil and utilities companies, it’s all been happening rather quietly – until now.

Seasoned market watchers will know Shell’s interest is no whim. Along with others, such as BP, it has long been busy in the background, testing the water around renewable generation, innovation, battery storage, retail and smart technology – albeit on a relatively small scale, compared with its expansive global operations.

Investment strategies have been multipronged, with targeted moves across a suite of lower-carbon solutions, such as electric vehicles, wind and solar.
Business models have been flexible, whether it be to build, invest or acquire.

Yet the opportunities appear to now be at their most compelling ever, a point confirmed by an industry source I spoke to this week.

Shell, they said, had been taking “baby steps” for a while, getting to understand the market. And, as industry’s focus shifts towards “securing the
energy relationship with consumers” – both at home and on the move – they are feeling bolder and more confident they can do this, recognising the chances
presented by convergence and energy mobility for international players with enough trading capacity to scale up.

So, should traditional utilities be worried?
Certainly, though some believe it may not be as easy as their new oil rivals seem to think. More used to high-risk, high-return models, there are doubts over how they might fare long term in operating lifeline, regulated companies with complex social responsibilities.

It should make for an interesting journey ahead.

Read more in our premium report ‘The future of oil firms as energy suppliers’

Suzanne Heneghan, acting editor,
suzanneheneghan@fav-house.com