Solar energy investments among E&Ps are rising as some of the oil and gas industry’s biggest players step up interest in renewable energy.
Royal Dutch Shell made one of the most recent steps by moving to acquire a majority interest—43.83%—in Nashville, Tenn.-based Silicon Ranch Corp., which owns and develops solar plants, for up to $217 million.
While the amount pales in comparison to the multimillion- or even billion-dollar headline-grabbing offshore oil and gas deals, the splash by the oil major is notable, as it signals what could be an emerging trend of fossil fuel players further diversifying portfolios as many across the world seek out cleaner energy sources.
Shell’s solar energy deal is its first investment in the technology in 12 years. In the company’s November 2017 management report, Shell said it would invest up to $2 billion in “new energies” that include biofuels, hydrogen, solar, wind and gas.
Silicon Ranch develops, owns and operates solar energy plants across the U.S., including in Alabama, California, Colorado, Georgia, Mississippi and Tennessee—to name a few. The deal, which is subject to regulatory approval and customary closing conditions, is expected to close in first-quarter 2018.
“We were impressed by Silicon Ranch’s proven track record, its market-led development strategy, and its long-term ownership model and commitment to the communities it serves,” Marc van Gerven, Shell’s vice president of solar, said in a news release. "Partnering with Silicon Ranch progresses our New Energies strategy and provides our U.S. customers with additional solar renewable options. With this entry into the fast-growing solar sector, Shell is able to leverage its expertise as one of the top three wholesale power sellers in the U.S., while expanding its global New Energies footprint.”
The Jan. 15 Silicon Ranch deal was followed Jan. 18 with word that Shell Energy Europe, the major’s energy marketing and trading division, and British Solar Renewables (BSR) agreed to a five-year offtake deal for renewable power generated from BSR’s Bradenstoke 269,000-panel solar power plant in England.
This is not Shell’s first solar soiree. The company acquired Siemens Solar in 2002 but divested its holdings in 2006 to SolarWorld.
The solar industry is fast-growing nowadays as costs fall thanks in part to economic incentives.
Shell isn’t the only oil and gas major taking steps lately into the solar energy realm.
In December, fellow energy giant BP also said it would invest in a solar power development. The company is investing $200 million in Lightsource—the largest solar development company in Europe—over three years for a 43% stake in the business. Lightsource will operate as Lightsource BP.
“BP has been committed to advancing lower-carbon energy for over 20 years and we’re excited to be coming back to solar, but in a new and very different way,” Bob Dudley, BP group chief executive, said in a statement. “While our history in the solar industry was centered on manufacturing panels, Lightsource BP will instead grow value through developing and managing major solar projects around the world. I am confident that the combination of Lightsource’s expertise and experience with BP’s relationships and resources will propel this innovative business to even more rapid growth.”
As countries work to reduce their carbon footprints, the energy industry could see more of these kinds of deals in the future.
Velda Addison can be reached at firstname.lastname@example.org.
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