The challenges facing utilities and other traditional players in the sector in the clean energy transition is by now well known.
But there is another group of companies, outside Engerati’s traditional focus, that also are being fundamentally impacted by this transformation, namely ‘big oil’. With the move away from fossil fuels towards low carbon electrification for power generation, heating and transportation, their whole raison d’être as explorers, producers and suppliers of fossil fuels is being upturned. Like the utilities, they are having to reinvent themselves and in so doing, are becoming increasingly competitive in the sector.
As examples, companies such as Shell and BP and others have started to diversify into renewable generation and to acquiring or investing in electric vehicle (EV) charging infrastructure providers and they are installing charge points and hydrogen refuelling points on fuel station forecourts.
Sonnen storage acquisition
While the installation of solar PV at forecourts to supply the charge points and the large scale supply of hydrogen are further opportunities being pursued, the inroads of these companies, particularly Shell, into the energy sector has clearly become increasingly aggressive over time.
In 2017 Shell acquired the Texas generator and retailer MP2 Energy and has been expanding its power supply and trading operations in various countries in Europe. The same year, Shell acquired the UK gas and electricity supplier First Utility, one of the first new entrants in that country to challenge the ‘Big Six’ and by 2013 the next biggest in size to them and supplying some 800,000 customers at the time of the acquisition.
This trend continued in 2018 with investments in the US retailer Inspire Energy, described as the ‘Netflix of energy’ offering renewables on a subscription basis, the microgrid company GI Energy and thermal storage manufacturer Axiom Energy.
Now in 2019 Shell has taken its next step with the acquisition of the German energy storage startup Sonnen. This follows an earlier investment by Shell in to the company in May 2018.
“Full ownership of Sonnen will allow us to offer more choice to customers seeking reliable, affordable and cleaner energy,” said Mark Gainsborough, Executive Vice President New Energies at Shell. “Together, we can accelerate the building of a customer-focused energy system in support of Shell’s strategy to offer more and cleaner energy solutions to customers.”
Sonnen provides its sonnenBatterie for intelligent home energy storage and a home energy automation solution named ecoLinx. The company has installed thousands of systems in its native Germany as well as elsewhere in Europe and the US and Australia, where its presence is growing.
In December Sonnen put into operation with the transmission system operator TenneT in Germany a virtual battery to provide balancing power to the grid. Described as “the largest of its kind”, the system networks individual residential storage systems across the country aggregating them into blocks of a minimum 1MW.
“Shell will help drive the growth of Sonnen to a new level,” said Christoph Ostermann, Chief Executive Officer and Co-Founder, in a statement that says the agreement will accelerate the ability of the companies to offer innovative integrated energy services and electric vehicle charging solutions as well as the provision of grid services based on Sonnen’s virtual battery pool.
Target markets initially at least are likely to be the UK and US, where the utility and EV charging infrastrucutre acquisitions have taken place. In addition to its 2017 acquisition of Dutch EV charging solution provider NewMotion, Shell also is in the process of acquiring the US-based Greenlots.
Shell’s energy transition
What clues there are about Shell’s future plans come from its Energy Transition report of April 2018, in which a primary thrust appears to be a reduction of the company’s CO2 emissions.
Noting that Shell manages over 10,000MW of power across North America, of which over one-third comes from renewable producers, the report says that electricity will be a large part of the company’s future.
“We want it to become the fourth pillar of our business, alongside oil, gas and chemicals,” states the report. “We are involved in every step of the oil and gas market, and we intend to apply this same model to electricity. We want to work back from the customer including the supply of electricity to end users, buying and selling it, and producing the electricity.”
New energy investments are expected to average between $1-2bn a year until 2020, with the largest part in power to gain access to customers and in generation powered by solar, wind and gas. In particular, Shell is focusing on expanding in power markets where it has an existing customer base and where the energy transition is expected to offer new opportunities in trading and selling natural gas, renewable power and storage, i.e. the markets in North America and Europe noted above. In addition, the company is looking at countries with large economies and fast-growing renewables sector.
Shell also is pursuing improved access to electricity in the developing world, as indicated by the investments in GI Energy as well as in the Indian off-grid energy system developer Husk Power.
The report also notes Shell’s continuing advances with EV charging delivery, including the offer to customers of vehicle-to-grid charging technology.
With all these developments, more such investments can be expected, particularly for delivery at the grid edge and more such investments can be expected, as they can in the other areas.