With European PV set for a bumper year of growth, Shell and Total have joined the list of oil and gas majors acquiring renewable energy expertise through acquisitions.
Total Eren – a renewable energy independent power producer in which oil and gas major Total has a 23% stake – today signed a share purchase agreement to buy €1 billion rated, Luxembourg-registered peer NovEnergia. Not to be outdone, Shell today moved to snap up London-based virtual power plant (VPP) technology company Limejump.
Total target Novenergia holds 47 solar, wind and small-scale hydro generation assets with a capacity of 657 MW in southern Europe. According to a statement announcing the acquisition, Novenergia’s operations are largely concentrated in Portugal, Italy, France, Spain, Bulgaria and Poland and are dominated by wind projects.
“Acquiring the NovEnergia Holding Company deeply strengthens our footprint in the European market, where Total Eren already holds a historical and long-lasting presence in France, Greece and Italy,” said Pâris Mouratoglou, Total Eren chairman. “This new milestone underlines how Total Eren successfully achieved to establish itself as a leading industrial player in the renewable energy sector in less than seven years of existence.”
Limejump, meanwhile, will become a wholly owned subsidiary of Shell once the terms of the acquisition are finalized. The British company’s VPP solution has already integrated assets with around 780 MW of generation capacity into its platform. The distributed assets bundled in this way can participate in the U.K.’s energy capacity market, frequency response and dispatch and balancing mechanism. Limejump was previously owned by Statkraft Ventures.
The trend is taking shape
Just two weeks ago, Shell announced its acquisition of German storage and VPP supplier sonnen – which has also started participating in grid service markets in Germany. Sonnen CEO Christoph Ostermann said Shell New Energies would be a “perfect strategic partner” to help his company expand in a dynamic market. “Especially with regards to the internationalization of our business and up-scaling of our production, Shell will be a strong partner to have our back, that allows us to operate swiftly,” he added.
Limejump CEO Erik Nygard said, in a similar vein, “Shell will help us to drive our innovative technology platform to new heights and support the Limejump team to make a bigger impact on the industry than previously possible. Put simply, we are now super-charged and ready.”
Europe’s renewable energy market is set for substantial growth with IHS Markit and other analysts expecting installation figures to return to 18 GW per year. France, Germany, Iberia and Italy in particular are expected to see substantial generation capacity growth on the back of new climate change targets and the rise of subsidy-free projects in southern Europe.
Against that backdrop, Total, EDF, and Engie have launched aggressive PV growth strategies. In 2017, Total said it was ready to invest in 10 GW of PV over 10 years in its domestic market. EDF wants 30 GW of new PV capacity, amounting to 30% of the expected French solar market to 2035 and recently acquired independent power producer Luxel. Engie won a 31%, 229 MW slice of France’s tender rounds in August – the largest share by a long way.
Growing pains
Acquiring smaller, more specialized independent power producers (IPPs) and renewable energy developers can help the oil majors accelerate their clean energy plans. “The acquired IPPs hold some projects which can increase instantly any buyer’s PV portfolio – see Langa’s 165 MW and Quadran’s 150 MW [capacities], but the real added value is the development knowledge,” Pietro Radoia, senior analyst at BloombergNEF told pv magazine.
The access to cheap capital offered by fossil fuel parents can prove enticing for smaller renewables concerns and the trend towards large-scale plants which can be refinanced without subsidy by signing corporate power purchase agreements can mean smaller IPPs need assistance.
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Acquiring independent IPPs is not the right way to go about it. It is astonishing how fossil fuel companies and legacy utilities have completely misunderstood renewables and continue to misunderstand it. The key is to look further down the road and have a vision of the electricity market and related services in 10-20 years’ time. Buying IPPs is an utter waste of capital.