Shell and BP to spread low-carbon investments

Shell and BP have set out their investment strategies as they look to increase their activities in energy.

In a special report from Utility Week BP’s vice president of advanced mobility, Roy Williamson said the company was looking at spreading their interests.

“I don’t think anyone knows what technologies will come out on top, so we have made targeted investments in a range of lower carbon solutions, including EVs, wind and solar,” he told Utility Week.

The structure through which BP invests is also flexible, adds Williamson, with investment so far coming through M&A activity, joint ventures and its own in-house research and development. “Our strategy is to partner, build, invest or acquire based on the individual circumstances,” he continues.  “It’s important that we have a number of levers we can pull on.”

Utility Week’s special report looks at the ambitions of the oil companies in the energy sector, examining the investments made so far and ambitions for the future.

It comes as Utility First, the energy retailer bought by Shell is rebranded as Shell Energy Retailer and a recent interview in which Shell said it wanted to become the world’s largest energy company by 2030.

Shell’s vice president for integrated energy solutions, Brian Davis, said that the acceleration in the field is down to a number of factors.

“We’ve been present for a long time here, but what’s probably changed more and more is the market opportunity is much more real and live more now than it was back then,” said Davis, referring to earlier forays in the market.

“It’s been driven by a couple of things; the technologies have come down the cost curve, so they need less subsidy or no subsidy; and societal expectations have changed a lot. More people want to see low-carbon solutions come in and actions to address climate change – and they are willing to pay for that.”

Like BP, Shell has taken a multi-pronged approach to investment in low-carbon solutions.

“In some cases we judged the best way to enter the market was M&A, as with Limejump or First Utility. We thought the team was fantastic and by buying it we got that capability much faster than by building it ourselves. So M&A plays a role in terms of accelerating entry and gaining access to capabilities.

“But alongside that we also do a lot in R&D because it’s not just about buying things but about growing them and continuing to adapt. We’ve also got organic start-up businesses that we’ve grown from scratch,” he said.

“What you are seeing more and more is the energy system is fragmenting and interconnecting. In the old days you had these linear chains where you had a regulated utility running the wires and the gas/petrol stations were different. Now, with electric vehicles, you’ve electrified transport so the vehicle gets charged at home not just the petrol station.”

Davis added: “If you look at that fragmentation and decentralisation, more power is in the hands of the end user – that’s the market we’re operating in. So we see value in being able to join it up and make it easy for end users.

“So when we look at our acquisitions we look at businesses that can work together to offer the customer something more comprehensive than what’s on the market today.”