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As the energy transition looms large, oil and gas Majors are increasingly seeking to establish renewables as a profitable part of their business. However, the value proposition of renewables is different from what the Majors see in their legacy oil and gas operations. When investing in large-scale renewable energy projects, the Majors will find that different business models, geographies and technologies will offer different returns and well as competitive advantages.
Choosing risk
Renewable energy investment differs from the Majors' typical business operations in that most projects are low risk, low return. However, certain types of projects have a risk-return profile that is comparable to some oil and gas investment. It is good news for the Majors that the most complex renewables projects tend to have both the best potential returns and the fewest players vying to participate. Offshore wind and large-scale solar photovoltaics in emerging markets both fit this mold.
Competitive advantage for the Majors
The renewables space is not as crowded as it looks. There are thousands of renewables developers but only a small portion of those pose a real competitive threat to oil and gas Majors. Unlike the average renewable project developer, oil and gas Majors can leverage existing expertise and relationships to make risky, complex renewables projects come to life. Strong balance sheets, experience with acquisitions, power trading expertise, and other resources set the Majors apart on the renewables playing field.
A list of high growth renewable energy markets for oil and gas Majors to target can be obtained from the slide deck
Solar, wind, oil and gas, and corporate strategy analysis combine in our three report series on the renewables opportunity for oil and gas Majors. Our report brochure slide deck goes into detail on the contents of each report and includes highlights from each.