Renewable energy investments swelling, oil & gas giants’ energy transition speeding up

Offshore wind could become a $ 1 trillion industry over the next two decades, and renewable energy in general will create an investment opportunity of between $ 8 trillion and $ 16 trillion by 2030, according to some of the reports recently published. Meanwhile, oil & gas giants are making concrete steps in the renewable energy realm and, given the deep oil & gas pockets, they might significantly contribute to the surge of the renewable energy investments.

Goldman Sachs, in its Carbonomics report from mid-June, has identified a total investment opportunity in clean energy infrastructure of up to $ 16 trillion by 2030, including renewable energy sources such as wind and solar, as well as green hydrogen, carbon capture and storage,  and technologies required to de-carbonise the energy value chain.

“Renewable power will become the largest area of spending in the energy industry in 2021 for the first time in history, on our estimates, reaching 25% of total energy supply capex”.

In their report on offshore wind, also released in mid-June, World Energy Reports identified a pipeline of more than 500 gigawatts (GW) of offshore wind projects and development zones. Globally, the current installed capacity is at 30 GW, according to the report.

The Outlook for Offshore Wind Power: The Frontier of Future Energy report also sees significant offshore wind market growth in Japan, Taiwan, South Korea, the U.S., and Brazil.

“Leveraging on the synergies with offshore oil & gas supply chains, we foresee the increased participation of oil companies in the offshore wind segment, as wind project returns become more competitive with traditional oil and gas portfolios”, World Energy Reports states.

The transition of oil & gas giants into renewable energy is accelerating, especially that of European “Big Oils”, who have reinforced their climate change commitments since the beginning of the year, according to Goldman Sachs.

The spurt toward renewables is also driven by the increasing investor engagement in climate change and favouring clean technologies, while investments in new oil fields have reached a new low in 2020, the report says.

Some 14% of oil & gas companies’ 2021 budgets are dedicated to renewables. Last year, “Big Oils” earmarked 4% for renewables.

Total recently took a majority stake in the Seagreen 1 offshore wind farm in Scotland, expected to be up and running in 2022/23. The company is also participating in a project investigating the potential of powering offshore oil and gas platforms with floating wind and wave energy.

Furthermore, in June, Total and Shell joined Offshore Renewable Energy (ORE) Catapult’s national Floating Offshore Wind Centre of Excellence (FOWCoE) in the UK, which aims to lower the costs of floating wind and accelerate its build-up.

Shell, together with Eneco, submitted a bid to build the Hollandse Kust (noord) offshore wind farm in the North Sea in May. The tender results are scheduled to be announced by the Dutch government by the end of this July.  

Equinor, the developer behind the world’s first floating wind farm, is currently working on bringing its Hywind Tampen project to realisation. The project got the go-ahead from the Norwegian Ministry of Petroleum and Industry this April. Hywind Tampen, which will consist of eleven 8 MW wind turbines installed some 140 kilometres off Norwegian coast, will power the Snorre and Gullfaks oil and gas platforms. The project is set to come online in late 2022.