Shell’s about-face on green energy continues, with battery maker sonnen tipped next to go

Global oil giant Shell continues to perform what now looks like a complete about-face on its march into the renewable energy future, with reports emerging from Europe that it will put German home battery manufacturer, sonnen, up for sale.

A German newspaper late last week reported that Shell was weighing the sale of the battery maker – a claim Shell has neither confirmed nor denied, commenting only that it is focused on pursuing global growth of its business.

But putting sonnen on the block would gel with the oil and gas major’s recent change of strategy, which has included abandoning cuts to oil production and a $40 billion investment in boosting the company’s fossil fuel interests, and prompted its head of renewables to resign.

Shell bought sonnen for around €500 million at the start of 2019 through its New Energies Division, as part of the company’s well publicised push into low-emissions electricity generation and supply and away from transport fuels. The battery maker is now tipped to reap a price of up to €2 billion.

Through its so-called “Powering Progress” strategy, Shell aimed to become a global leader in the supply of renewable electric power, targeting sales of around 560 terawatt-hours a year by 2030 to more than 15 million retail and business customers worldwide.

In Australia, this led to the acquisition of ERM Power, an electricity retailer with a dedicated business in providing supplies to commercial and industrial customers.

Shell then bought a 49 per cent stake in solar developer Esco Pacific, to build up a base of cheap green power to underpin contracts with big and small business users.

Shell also chose Australia as the site for its “first ever” foray into solar farm development, with the construction of the 120MW Gangarri project near Wondoan in Queensland’s south west, which started powering up in September 2021.

And in November 2021, Shell took ownership of online energy retailer Powershop Australia, accelerating its ambition to challenge the country’s legacy energy retailers.

“This acquisition is another example of how we are continuing to grow our footprint in Australia to meet customers’ evolving needs through the energy transition,” Shell Australia chairman Tony Nunan said at the time.

“Powershop today offers innovative energy packages, and customers will benefit in the future from access to Shell’s broader suite of energy solutions linked to e-mobility and battery storage.”

Now, however, Shell appears to have completely changed its tune.

In June, the company advised shareholders it would keep oil production stable until 2030, rather than cut it by between 1-2% a year, and invest $40 billion in oil and gas production between 2023 and 2035, compared with between $10-$15 billion on “low-carbon” product.

A strategic review of its home retail energy businesses in Britain, Germany and the Netherlands – launched shortly after the appointment of new CEO Wael Sawan – led to a decision to sell them off.

The UK and Germany assets were sold just this month, to Octopus Energy. “To drive performance, discipline and simplification, we are prioritising countries, projects, and routes to market where we can deliver the most value,” Steve Hill, executive vice-president said in a statement.

New Shell CEO Sawan, who took up the role last September, is taking the line that to cut global oil and gas production at this point in time would cause more harm than good.

“What would be dangerous and irresponsible is cutting oil and gas production so that the cost of living, as we saw last year, starts to shoot up again,” Sawan told the BBC.

These comments have been slammed as cynical by climate groups, particularly considering the surge in fossil fuel prices, driven by Russia’s invasion of Ukraine, helped Shell more than double its annual profits for the year to $US40bn compared with $19bn in 2021.

In Australia, Shell sold its 49 per cent stake in Esco Pacific in March. It still owns Powershop and ERM Power.

Elsewhere, Shell Energy Australia is part of a joint venture to develop, own and operate a 500MW and 1,000MWh big battery in the NSW Central West Orana REZ.

It also unveiled $31.6 million plans to harness an estimated 21.5MW of demand-side capacity by managing the loads of at least 40 commercial and industrial sites across Australia. That project has won backing from ARENA.

Shell Energy Operations has also bought up a 370MW hybrid wind, solar and battery storage project approved for Perth in Western Australia, in a joint venture with Foresight.

And in March, Shell agreed to buy a 49 per cent share of Australian wind farm developer WestWind Energy Development, which has a 3GW project pipeline across Victoria, New South Wales and Queensland.