Source: Institute for Energy Economics and Financial Analysis
Oil and gas majors are increasingly investing in renewables in the face of mounting pressure from consumers, investors and regulators pushing for an energy transition. In the Asia-Pacific region outside China, renewable energy investment will overtake spending on upstream oil and gas projects as early as next year, according to a report by Norwegian consultancy Rystad Energy.
By 2020, capital expenditure on renewables will surpass US$30 billion and leave fossil fuel exploration and production spending in its wake for the first time. The trend will be driven by big contributions from Australia and Asian countries including India, Vietnam, Taiwan and South Korea.
“These countries each have strong pipelines for renewable energy developments of all types, including offshore wind,” said Gero Farruggio, head of renewables at Rystad Energy. “And importantly, most have large targets outlining the inclusion of renewable power sources within their respective energy mixes, with corresponding support policies.”
According to Rystad, the step change came with the emergence of oil and gas majors as investors. “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.
Although only 1% of the country’s solar, wind and utility storage projects are owned by oil majors, the consultancy forecasts upstream companies will become the dominant renewable developers in the years ahead. “Upstream companies will lead the charge, building sizable utility storage, solar and – ultimately – offshore wind portfolios,” Farruggio added. “Solar panels, lithium ion batteries and turbines will soon be conventional segments of Australia’s oilﬁeld services.”
The pipeline is already taking shape across the country. For instance, Total Eren has started construction of Victoria’s biggest solar project, the 256.5 MW Kiamal Solar Farm, and is looking to add a second stage with a generation capacity of up to 194 MW. On top of that, the renewables developer – which is 23% owned by French oil and gas giant Total – is exploring commercial options for an approved 380 MWh of energy storage.