When Big Oil majors started buying EV charging networks and battery producers, they probably earned some praise for venturing into new business directions away from their increasingly unpopular core business. Now, they are taking this a step further: supermajors have super utility plans.
It was only a matter of time, really. Integrated oil companies know the importance of covering the whole supply chain in an industry, so it only made sense to grow into power generation once you’ve established a presence in one of the biggest growth segments in power demand: electric vehicles.
French Total led the way by buying local electricity retailer Direct Energie last year for more than US$1.7 billion.
According to CEO Patrick Pouyanne, electricity will be the energy of the 21st century and Total is using every opportunity to expand there. In fact, since 2014 when Pouyanne assumed the top post at Total, the company has become a utility as well as an oil an gas company after a string of acquisitions across power generation (Eren), battery manufacturing (Saft), and power distribution (Direct Energie, Lampiris).
But Total is not the only one. Shell recently made headlines with plans to become not just a player in electricity generation, but also the biggest one by 2030.
Bloomberg reported earlier this month that the Anglo-Dutch supermajor was pouring US$2 billion annually into its new energies division that aimed to expand its presence in cleaner power generation.
This segment could yield returns of between 8 and 12 percent, the head of the new energies unit, Maarten Wetselaar, told Bloomberg.
Like Total, Shell is growing through acquisitions in the power generation and distribution sector as well as in EV charging.
This power plan fits in with the company’s strategy of reducing the portion of oil in its overall production to 25 percent from 50 percent and raising the portion of gas to 75 percent.
What’s more, however, Shell specifically plans to materialize its power ambitions by betting on renewables rather than on conventional power generation and distribution.