Some of the world’s largest fossil utilities and developers have something new in common: They all aspire to be one of the world’s leading renewable energy companies.
As Germany’s E.ON says, the new focus on renewables acknowledges “the growth potential created by the transformation of the energy world.”
Expectations are high for October 7, when Europe’s largest utility spins off its renewable energy division on the public markets.
Innogy, RWE’s renewable energy IPO, is expected to be Europe’s biggest since 2011. The company could be valued as high as $22.5 billion, says Bloomberg New Energy Finance. In September, competitor E.ON did the opposite. It listed Uniper, its fossil and hydropower side, so that it can focus on renewables, energy networks, and energy efficiency services.
E.ON, based in Germany, has been struggling on the fossil fuel side because the government now gives renewables priority on the grid.
Its new product combines solar PV and energy storage and E.ON is working on storage for utility and business markets, and with Samsung on microgrid technology. It expects renewable energy generation to triple in its key markets over the next 15 years.
Europe’s biggest IPO so far this year is Dong Energy, a conventional energy developer that’s transitioning to renewables. A leading offshore wind developer, its June IPO values the company at about EUR 11 billion.
Another fossil giant, Total – which has a majority stake in SunPower – says that within 20 years it will be “in the top three in solar power, expand in electricity trading, energy efficiency and energy storage, and be a leader in biofuels, especially biojet fuel.”
Total is acquiring leading battery manufacturer Saft Groupe in a premium $1.1 billion deal as part of a $500 million a year investment strategy for renewable energy.
It’s reducing tar sands oil development and has decided to stay out of drilling in the Arctic because “Our ambition for Total in 2035 is consistent with the IEA’s 2°C scenario” where “part of the world’s fossil fuel resources cannot be developed.” Read Total’s report, Integrating Climate Into Our Strategy.
Utilities in Italy and Spain are among the leading renewables developers, Enel and Iberdrola, respectively. EDF Renewable Energy is buying US-based installer groSolar.
Even Shell, now infamous for its Arctic foray last summer, is reviving its renewable energy division, which it closed in 2009. It’s getting back in with a $1.7 billion investment in a New Energies arm that includes, wind, hydrogen and biofuels. Competitor Statoil’s New Energy Solutions division won a seabed lease to build Hywind, the world’s largest floating windfarm, off the coast of Scotland.
In India, Indian Oil Corp. and Oil India are developing a 1-gigawatt (GW) solar farm, and power producers like NTPC Ltd. and Tata Power have big plans, with the latter recently buying 1.1 GW of clean energy capacity.
Utility China Guodian Corp. owns the world’s biggest wind developer, China Longyuan Power Group Corp.
All these investments are miniscule compared to their fossil businesses, and some question their motives. After all, oil companies called for a carbon tax ahead of the Paris Climate Summit, but their goal was to boost their gas businesses.
Chevron, BP and Exxon closed their renewable energy divisions a few years ago because profits from fossil fuels were so high, and so far they’re sticking with that.
And many still do their best to prevent efforts on climate change, fighting California’s cap-and-trade program and Europe’s effort to increase renewable energy targets. In the US, they are among the biggest campaign donors to Republicans who block all these efforts.