Oil and gas majors could lead Australian renewables development by 2020

Renewable energy investment in Australasia will overtake spending on upstream oil and gas projects as early as next year, a new report has forecast – in a shift led by none other than the oil and gas industry itself.

The analysis, by Norway-based independent oil and gas consultancy Rystad Energy, predicts that total capital expenditure in renewables will overtake exploration and production spending in 2020, with contributions from Australia and other Asian countries (China excluded).

“These countries each have strong pipelines for renewable energy developments of all types, including offshore wind,” says Gero Farruggio, head of renewables at Rystad.

“And, importantly, most have large targets outlining the inclusion of renewable power sources within their respective energy mixes, with corresponding support policies.”

But perhaps the most interesting part of Rystad’s analysis is the predictions about who will lead this trend – and where and why.

“By 2020 it is feasible that the majors will be the dominant renewable developers in Australia as they pursue ‘oil and gas’ scale opportunities. Commercial drivers are increasing the desire to ride the ‘solar-coaster’,” Farruggio said.

And this is forecast despite the fact that – right now – only 1 per cent of the country’s solar, wind and utility storage projects is currently owned by oil majors.

“Upstream companies will lead the charge, building sizeable utility storage, solar and – ultimately – offshore wind portfolios. Solar panels, lithium ion batteries and turbines will soon be conventional segments of Australia’s oilfield services,” Farruggio added.

And already, this is starting to play out.

Total Eren – which is part-owned by the world’s fourth-largest oil and gas company – has major plans for renewables around the globe, including construction of a 400MW solar farm with battery storage in north-west Victoria.

And Royal Dutch Shell has recently bought German battery maker sonnen, as well as two electric vehicle charging companies, and UK-based First Utility, as part of its plans to go from Big Oil to Big Electric.

In Australia, this includes plans to lay down a substantial challenge to Australia’s major power utilities within a decade, focusing on the power trading business and providing services to customers wanting solar, storage and electric vehicles.

And Italian gas major Enel Group, via its own renewables subsidiary Enel Green Power, is behind one of Australia’s biggest solar projects, the 220MW Bungala solar farm near Port Augusta in South Australia.

“Investor confidence is high in Australia, and the country currently has a development pipeline of over 105 GW of solar, wind and storage projects, as well as a fleet of ageing coal-fired power stations which will require replacement,” the report says.