At the beginning of July, Shell Energy North America, a division of the oil and gas giant Royal Dutch Shell, announced a purchase agreement for the acquisition of Texas-based MP2 Energy. The bid highlighted Shell’s growing interest in the power sector, including renewable energy and energy management services which includes both energy generation and supply.
Within the same month, energy company Hellenic Petroleum, has also taken steps to diversifying its business interests in the energy sector. The European Bank for Reconstruction and Development (EBRD) has provided energy company Hellenic Petroleum with €28.3m to help the company diversify and develop new renewable projects.
The EBRD subscribed to bonds, issued by Hellenic Petroleum that will support a number of wind and solar projects totalling 190MW.
Greek Renewable Energy Framework
The EBRD launched its Greek Renewable Energy Framework in March this year. The goal of the €300m facility is to finance investments in electricity generation from renewable sources and in electricity distribution and transmission capacity to improve efficiency, reduce losses and enable the integration of renewables into the grid.
The Framework follows Greece’s establishment of a market-based, renewable energy support scheme that introduces competitive auctions to replace fixed-price feed-in tariffs. Hellenic Petroleum's renewables subsidiary, Elpe Renewables, submitted successful bids for three PV power plants in the first such auction and has more projects under preparation.
The EBRD’s Framework is aimed at supporting Greece in harnessing its renewable energy potential so as to reduce its dependence on fossil fuels and costly imports.
Harry Boyd-Carpenter, EBRD Director, Power and Energy Utilities, said: “We are very pleased to support Hellenic Petroleum in diversifying their business into renewable energy. Our new renewables support scheme in Greece lays a sustainable foundation for the development of the sector, in particular by using a competitive mechanism. The success of such a strong and experienced company as Hellenic Petroleum is a real endorsement for that mechanism.”
Andreas Shiamishis, Deputy CEO & CFO of Hellenic Petroleum, added: “The EBRD has been a long-standing partner of Hellenic Petroleum and this transaction presents us with another opportunity to increase the scope of our cooperation. The EBRD’s commitment to Greece and the renewables sector is aligned with our own strategy and supports economic growth and investment in the country.”
Oil companies adapt
More than a fifth of investment by the largest oil and gas companies could be in wind and solar power in just over a decade, according to an analysis by research group Wood Mackenzie which investigates how global changes in energy will reshape the sector.
A reduction in oil demand and fast growth in renewables is posing both threats and opportunities for oil companies like BP, Shell and Total, says research group Wood Mackenzie.
“The momentum behind these [renewable] technologies is unstoppable now,” said Valentina Kretzschmar, director of research.
“They [the oil companies] are recognising it is a megatrend; it’s not a fad, it’s not going away. There is definitely a risk to their core business.”
Many of the oil and gas giants are slowly transforming to adapt to new climate change policies and a reduced oil demand. A good example of this is Norway’s Statoil which is deploying the world’s first floating offshore windfarm later this year off Scotland.
Wood Mackenzie said most oil and gas companies realised renewables posed an existential risk to them and needed to hedge against the threat by diversifying.