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Shell VP: ‘We Want Power to Sit Alongside Oil, Gas and Chemicals Businesses’

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Shell has quickened its transition to new energies in the last few decades, particularly in the power sector. Shell is turning into one of the best examples of how gas and oil titans are asset portfolios and investing billions in energy.

We sit down with Brian Davis, Shell’s vice president of energy solutions, to discuss the way ahead for Shell New Energies just days before he awakens to Austin to join us for Power & Renewables Summit next week. There, he'll speak about the transition to the energy markets of the future along with Austin Energy, AEP and Marathon Capital.

GTM: What portions of the worth series that is renewables create the most sense for oil and gas majors such as Shell to perform in?

Brian DavisWe are looking to build on our strengths and capacities in gas and oil production and marketing to cultivate our renewable power business. We already generate power from renewable resources, and we’re trying to expand our capacity through development of more solar and wind production projects. In addition, we buy renewable power from other manufacturers. We sell power to end residential, as well as clients, commercial and industrial and trade power through our trading business.

In the industry that I symbolize, Shell New Energies, we could invest around $1 billion to $2 billion a year until 2020 in power and new fuels. That might appear modest by gas and oil standards, but we could do a lot using it in this space.

That’s a portion of us evolving into an energy company, aiming to supply our existing and prospective clients with cleaner and more energy.

GTM: Shell has long been one of the most active M&A players in energy with branches such as MP2 and Silicon Ranch. What orders its corporate development plan in energy that is clean?

Brian Davis: We have a customer-first strategy. We would like to give more choice of energy solutions to our clients. We are an energy company, and our purpose is to meet the energy demands and in the future.

Electricity is the fastest-growing aspect of the energy system, and we plan to create power a significant business for Shell, one which in the future could sit with oil, gas and chemicals.

We started supplying commercial and industrial clients in North America more than 20 decades ago. As you noted, within the previous two years we raised the amount of power we supply directly to commercial and industrial clients, as well as residential ones, with our recent acquisition of MP2 Energy in the U.S. and First Utility in the U.K.. Our investments at the Borssele 4 and 3 wind farm project in the Netherlands and also the solar company Silicon Ranch Corp. in the U.S. have increased our participation in renewable power.

And we don’t limit ourselves to providing electrons and atoms. We are also expanding the offering of energy alternatives. Just recently we found our bundled power offering commercial and industrial clients in North America, Shell Energy Inside. We work to help them meet their sustainability cost and resiliency goals by providing services and seamlessly integrated behind-the-meter energy products.

GTM: How can you see energy business models evolving within the next five decades? Which are the essential market differences between Europe and the U.S. when it has to do with DERs?

Brian DavisWe consider DERs will become more crucial to solving issues. . .larger-scale renewables production, [too ] because EV charging along with services that pressure distribution lines in ways they were never designed for.

DERs will need to stand more. . .absent subsidies. A good example of the latter is metering. This topic is currently under review in a great deal of places in the U.S.. So for business models, these DERs will need to rely upon a benefit they could provide that assists the customer supporting the meter, as well as the network they’re connected to.

We see a number of the exact tendencies driving DER adoption, such as falling equipment prices that give users access to their own power and a sense of some independence or control from changing energy or supply costs; a powerful push to reduce energy intake and protected cleaner sources of power (so energy efficiency and renewable resources such as PV); plus also a desire to control their energy demands and in a unique way, but without the freedom. 

But adoption is much more nuanced. By way of example, at the U.S., regions prone to significant weather events are driving DER adoption for resiliency reasons alone, as well as clients needing more management of utility prices (the “cables charges”-RRB-. In addition, we see an emerging trend where communities are looking to construct their own energy sources or networks of supply, locally created and in a way which are extremely low-carbon, and using restricted net export or import out of the grid. 

In Europe, with policies that promote renewable DERs or large renewables, there would be a need for additional distributed assets to manage grid reliability and balance more intermittent sources of generation.

GTM: It was recently announced Shell will be cooperating with NREL for its Shell GameChanger Accelerator (GCxN)and also a multimillion-dollar accelerator application mainly focused on long-term energy storage technology. Can you clarify more?

Brian Davis: GCxN covers a Assortment of places in New Energies Research & Technology. For the first year, long-life battery storage is indeed one of those focus areas, along with “grid of the future”

We understand that a single company or idea would not be able to revolutionize the whole of the energy system. And we work in partnerships like this one as we recognize that the next best idea is likely to come from a range of sources.

In terms of storage, lower-cost and more robust technologies are needed for extended-duration applications, particularly when paired with large-scale renewable energy generation. While the term”energy storage” has often been used interchangeably with”batteries,” the variety of potential storage alternatives broadens at longer durations and larger scales, since the energy system demands not only electrons but also cold and heat. Price and system integration may also play key roles.

We have invested in businesses which offer novel storage solutions. Axiom Exergy is a Californian startup that offers storage tanks and integration software into supermarkets, food processing plants and cold-storage centers. We also invested in the German business sonnen, which offers intelligent battery storage methods along with solar panels for homes.

Come back to Austin next week to Power & Renewables Summit 2018 to combine Shell and other Top energy players, such as Exelon, ERCOT, FERC, First Solar, APS, LADWP, AEP, Tesla and many more. The event will collect industry perspectives on how sustainable energy integration, decarbonization, electrification along with also the expanding need for increased flexibility and capacity are impacting power systems.

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