Big Oil’s new fashion accessory: “green gas” plants

So, here’s the good news. Big Oil is increasingly looking at large-scale renewable energy plants as a valid alternative to coal and gas plants – not surprising given the plunging cost of wind and solar technology in the last few years.

Shell is the latest to commit to building large-scale renewables, confirming late last week a promise that it made nearly a year ago that it was looking to invest in wind and solar plants, a shift it hopes will help underpin the demand for gas.

Together, Big Oil hopes, they can kill the coal industry by marrying wind, solar and gas, and they are talking up the climate imperative to help them do so.

But “green gas plants”? This ranks up there with “clean coal” as fossil fuel propaganda, but it is exactly the way that the Murdoch media chose to describe Shell’s promise to combine solar and gas in Oman, Brunei and Australia, trumpeting the headline “Shell to invest in green gas plants” to lead its business section.

Let’s get a few things in perspective. It’s great that Big Oil is increasingly looking at wind and solar for new investments. Dong Energy has already shifted in a big way to wind and will dump coal altogether in a few years. France’s Total is the major shareholder in SunPower.

Shell and the other Big Oil players hope that the world uses more gas and sees the big push towards renewable energy as a major opportunity to create demand for their huge gas reserves: hence their concerted attack on coal as a dirty and unnecessary power source.

But is Shell really going to build new gas plants to partner solar facilities? Hardly. Australia does not have a shortage of gas plants: Most of them sit unused for large chunks of the time, sidelined by cheaper coal or the growth in renewables, and by soaring gas prices.

And its biggest competition will not come from more renewables, which it sees as a potential partner, but from battery storage, particularly as gas prices continue to remain high.

Storage costs are coming down fast, and batteries are much more responsive than gas and can provide more added value – to the grid, in avoiding network investment as well as responding to variations in demand and supply and peak demand events.

And if Shell’s commitment to big solar in Australia sounded just a little vague, there is a reason why,

As the Financial Times points out in its reporting of the press conference late last week, Shell intends to invest less than $1 billion a year in renewables across the globe – just a fraction of its annual capital expenditure of nearly $US30 billion.

And this would include wind farms – already it is contracted to build a large wind farm off the Dutch coast and has been shortlisted for a similar US project in waters off North Carolina.

In other words, its commitment to “green gas” in Australia will be minuscule, and likely less significant than the many new players entering the Australian markets to build facilities that go by their real name: solar plants.