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Shell’s Shopping List Paints Picture Of The Power Market Yet To Come

John Parnell: Contributor: 25 Feb 2019

Today there were reports that oil and gas giant Shell is keen to get involved with the UK’s vibrant offshore wind sector. Earlier this month it announced that it bought the German energy storage and management provider sonnen.

If news had broken three years ago that Shell had acquired a 100% stake in a German energy storage company the reaction would have been confusion, surprise and probably a dose of suspicion.

In that time, the company has launched a consumer-facing utility brand, acquired an EV infrastructure firm and declared that electricity will be the “fourth pillar” of its business.

It’s less than one year since Shell made a €60 million investment in sonnen. The German firm manufactures batteries for the residential market. More interesting to industry-watchers, and probably to Shell, is the way those batteries are pooled to enable trading between those in the sonnen community and to enable the aggregate power of that network to act as a virtual power plant. This is controlled by sonnen’s own proprietary tech.

“Sonnen is one of the global leaders in smart, distributed energy storage systems and has a track record of customer-focused innovation. Full ownership of sonnen will allow us to offer more choice to customers seeking reliable, affordable and cleaner energy,” said Mark Gainsborough, EVP New Energies, 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,” he added.

As a piece of marketing speak, customer-focused is quite a banal. In this context, it is potentially powerful. Shell wants to sell lots and lots of electricity and as a newcomer, it is far more open-minded about where that electricity might come from in the first place.  That source may very well be its own customers.

As the regulatory framework in many U.S. states and across Europe becomes more liberal and who can and cannot sell power, the scale of this opportunity for a decentralized play in the electricity sector grows too.

Christoph Ostermann, CEO and co-founder of sonnen, said: “With this investment we’re excited to help more households to become energy independent and benefit from new opportunities in the energy market. Shell will help drive the growth of sonnen to a new level and help speed up the transformation of the energy system.”

The offering at sonnen, formerly sonnenbatterie, looks pretty rounded. As Ostermann says, these new resources can be pumped into growth.

And that word is the panacea for a company in Shell’s position. The firm’s shareholders have been playing hardball over executive pay and successfully pressed for transparency and planning over its future carbon planning. Investors want dividends and that means growth.

The so-called fourth pillar appeases those ‘softer’ concerns and also adds new revenue to hedge against oil price volatility and the fortunes of its exploration efforts. As with most forays into renewables and clean energy by the major oil companies, pragmatism and ambition are in no short supply.

SOURCE

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