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Shell seen expanding acquisitions to become world’s biggest power company

|About: Royal Dutch Shell plc (RDS.A)| By: , SA News Editor

Royal Dutch Shell (RDS.A +0.3%) could ramp up acquisitions of electricity producers to achieve its target of becoming the world’s biggest power company by the 2030s, Bernstein analysts say.

Shell must produce 214 terawatt hours of clean power every year by 2035 to become the biggest low-carbon electricity provider, which Bernstein says could be achieved through organic growth, ultimately managing 61 GW of power capacity, but the company probably will want to move faster and expand acquisitions of electricity producers.

A key challenge to Shell’s plan is the company’s pledge to cut its carbon footprint in half by 2050, which means most of the capacity it adds to its portfolio must come from wind and solar power; to reach the 61 GW target, calculated by Bernstein, Shell would need to add 3 GW of clean capacity each year.

“That means we should absolutely expect Shell to also grow inorganically to the potential no. 1 spot,” Bernstein writes. “Investors remain divided on this diversifying capital allocation.”

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