We have seen many Fortune 500 companies transitioning toward clean energy, but now we are starting to see the oil and gas industry investing in renewable energy. Why is it that the “opposition” to renewable energy is now purchasing renewable energy? Are we on the precipice of change?
All across the globe, oil and gas companies have shifted their spending to renewable energy. Partnerships between big name oil & gas brands and renewable energy companies are solidifying, as the oil and gas industry is working to expand and evolve.
Most companies do not want to miss out on the important transition into renewables that is taking place. While a majority of oil and gas companies that are getting into renewable energy are European, there are some companies from the U.S., especially in Texas, that are now seeing the appeal in renewables. ExxonMobil, BP, Total, Shell, and Baker Hughes are among the big names that are investing in renewable energy companies or signing power purchase agreements with renewable projects.
Oil company ExxonMobil solidified a deal to power its Permian Basin operations from a 250 MW wind project and a 250 MW solar project, both in Texas. Having an existing majority share in SunPower and a 50% stake in Adani Group’s solar, the French oil and gas powerhouse Total recently partnered with Marubeni to build an 800 MW solar facility in Qatar. BP’s investment in and partnership with Lightsource BP is putting the company on track to achieve its goal of becoming a net-zero carbon emitter by 2050.
Shell has made significant moves towards renewables, and solar in particular. Shell owns multiple solar development companies and is the offtaker of the 250 MW Phoebe and the 300 MW Prospero solar projects in Texas. They have declared a goal of zero carbon emissions and have even already begun working towards their own solar farm in Australia.
Baker Hughes, a sizable oil company based in Houston, TX, has been a prominent part of the oil and gas industry for over one hundred years. Throughout their history, the company has always found ways to “redefine what’s possible.”
At the end of 2019, they announced that they would purchase 100 percent of their Texas electricity from renewable sources. To make that switch, Baker Hughes turned to 7X Energy for solar energy. The Elara Energy Project is being contracted through EDF Energy Service for Baker Hughes. The partnership between Baker Hughes and 7X Energy builds on Baker Hughes’ global renewable efforts.
Driving Forces for Change
The motives behind these emerging partnerships can be broken down into three categories: environmental impact, cost-effectiveness, and strategy.
With increased pressure from the global community of investors, regulators, and the general public, oil and gas companies are seeking to reduce their large carbon footprints. Additionally, using renewable energy has proven economic benefits; wind and solar have become some of the cheapest sources of electrical power for oil and gas operations. Turning to renewables allows these companies to reduce their operating costs and find greater profits in their business. Finally, by diversifying their businesses, oil and gas companies are seeking to ensure their longevity and relevance in the constantly evolving energy industry. With these driving forces, change is inevitable for the oil and gas industry.
Partnership Towards a Clean Energy Future
All of this bodes well for the renewable energy industry. With these exciting partnerships that are emerging between previously competing players, a global paradigm shift is truly occurring as fossil fuel companies understand the need to shift towards solar and wind energy thus accelerating the transition to a clean energy future.