Last month Shell completed the acquisition of First Utility, a midsized British gas and electricity supplier that already operates under the Shell brand in Germany. The Anglo-Dutch firm plans to make a similar move in Australia. Late last year Total launched the supply of gas and green power to households in France, through its Total Spring brand. Both have invested in renewable energy and are installing EV charging points in their networks of petrol stations. “We don’t see how we can be an energy major if we don’t become a significant player in electricity,” says Maarten Wetselaar, head of gas and new energies at Shell. A Total executive says: “Why should we limit ourselves to selling gas to a utility when we can sell to end-customers?”
Peter Atherton, of Cornwall Insight, a consultancy, says that whereas supermajors aim for returns on capital on big oil and gas developments of 15%, renewables provide returns of 7-9%. In Britain, the energy retailers aim for profit margins of 4-5%.
Moreover, small beginnings may mask big ambitions. Mr Wetselaar says his aim is to generate electricity returns of 8-12%, which he thinks is feasible because Shell, with its energy-trading experience, can profit from the heightened volatility of power markets in the era of renewables and EVs, as well as from more flexible demand from consumers. To become material to Shell, the electricity business would need to grow to $50bn-100bn, on a par with the size of its current gas business, he says.
Submitted March 30, 2018 at 11:04AM by COMPUTER1313 https://ift.tt/2pRCqJz
