Could renewables be the Majors' next big thing? Report

Insight 04 May 2017

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Report summary

Wind and solar are poised to radically reshape energy markets. Though the timing of the energy transition is highly uncertain, oil and gas companies need to build expertise, balance and optionality to hedge against any future erosion of the upstream value proposition. The Majors are leading the way in shaping strategies as they look to capture a piece of the action in this fast growing market.

Executive summary
The Majors need a piece of the action in renewables
Large-scale investment needed to grow a meaningful position
- Renewables value proposition is competitive
- Returns versus upstream options
- Cash flow visibility is a key attraction
Scale is a challenge – offshore wind is one answer
Renewables strategies will be polarised but increasingly prominent
Five key factors that will influence strategies
Early adopters will have structurally different portfolios by 2035
Appendix

Tables and charts

This report includes 10 images and tables including:

Total primary energy demand growth from 2015 to 2035
Renewables power market growth, 2015 to 2035
Evolution of real revenues from renewables and global oil and gas (base case and carbon constrained scenario)

Production profile for Majors if renewables' market share matches oil and gas by 2035
Capex needed for renewables' market share to match oil and gas by 2035
Cash flow from scaled-up offshore wind vs large upstream growth projects
Cash flow from scaled-up solar PV and onshore wind vs medium-sized upstream growth projects
Main assumptions by project
Comparison of wind, solar and upstream IRRs*
Cash flow from base-case wind and solar projects

What's included

This report contains:

Could renewables be the Majors' next big thing?

PDF 346.34 KB
Could renewables be the Majors' next big thing?

ZIP 421.04 KB
Could renewables be the Majors' next big thing.xls

XLS 162.00 KB

Why buy this report?

The transition to new energy marks the biggest shift in strategic direction in a generation. The growth opportunity in renewables cannot be ignored. Use our analysis to:

Understand how the Majors are repositioning portfolios as the case for renewables becomes compelling
Identify the scale of the opportunity for renewables, expected to be the fastest-growing primary energy source globally over the next 20 years
Make informed capital allocation decisions by comparing renewable energy against upstream returns

We have invested heavily to build a strong competency in alternative power and renewables.

Our report offers an expert view of the factors that will influence the Major's investment decisions as they seek to take advantage of growing renewable energy demand. It includes:

Data tracking growth in the renewables market over 20 years
Forecasts for how real revenues will evolve from renewables, and shift away from global oil and gas
Detailed power project economics, based on market geography and plant type
Cost comparison of wind and solar against upstream projects, to compare and contrast opportunities

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