AMSTERDAM (Reuters) - As the Netherlands struggles to meet its renewable energy goals, Shell’s country chief executive sees its role as the architect of big, high-risk projects such as wind turbine farms -- for the time being.
In an interview, Marjan van Loon said Shell had joined a coalition of companies urging the Dutch government to greatly increase its ambitions for offshore wind farms from its current plan for 5 tenders of 700 megawatt farms.
“We are pushing government, we want to do one to two gigawatts per year: let’s build, say, 20-30 gigawatts by the end of next decade,” she told Reuters.
Shell led a consortium that won the second of the 5 currently planned tenders in December 2016, for a subsidy of 54.50 euros per megawatt hour -- at the time a record low.
Banking sources told Reuters on Tuesday that Shell has begun raising 1 billion euros in debt to finance the Borssele project, and consortium members are also seeking to sell an equity stake of around 40 percent.
Van Loon said the Shell’s sweet spot is in “financing, designing and technically operating” large projects, but after building them “there’s actually not that much technical risk anymore.”
“It’s quite a steady state operation with very little operational expenditure. And there are other partners, pension funds etc which would like to invest in owning these assets but demand a lower rate of return, so we de-risk.”
“We would like to remain present, but we don’t mind inviting other partners, freeing up capital to go to the next project.”
Denmark’s Orsted, the other winner to date of a major Dutch wind project, has followed a similar strategy.
The economic affairs ministry is due to publish terms this month for the auction for the next 700 megawatt offshore project, Hollandse Kust Zuid, the first Dutch project with no subsidy offered.
Van Loon said it was not clear what Shell’s role will be in renewables in the longer term, though it has strengths in infrastructure, trading, customer service, and storage.
One possibility is that Shell could enter the Dutch retail electricity market, after announcing plans in August to enter the British industrial electricity market.
Analysts as well as banking and political sources have identified Shell as a possible bidder for Eneco [ENECO.UL], the Dutch electricity company whose municipal shareholders are currently deciding whether and how to sell their shares. [L8N1L14D9] Eneco is a junior partner in the Borssele project.
Without commenting on Eneco, Van Loon said Shell has the ability to do retail, and as the world shifts from a hydrocarbon economy to an electron economy “it could be that we want to play there -- it’s to be found out in the future.”
“We have an intimacy with customers because we have 43,000 retail stations (globally), so we know how to interface with the public,” she said.
She noted in passing that Shell stations make more money from other goods and services than they do from gas.
“We sell more coffee than Starbucks.”
Reporting by Toby Sterling, editing by David Evans