Oil and gas companies pursue renewable energy ambitions, but investments to remain cautious

Global power generation is experiencing a significant shift toward renewable sources, leading to a gradual decline in reliance on fossil fuels. Over the past decade, global power generation has increased by roughly 30%, and during that period, renewable energy has nearly doubled. Renewables are expected to account for more than 40% of the global power generation by 2030, marking a pivotal achievement in global climate change efforts. However, oil and gas companies are expected to remain cautious about renewable energy investments even as they press ahead to reach their renewables targets, according to GlobalData, a leading intelligence and productivity platform.

GlobalData's Strategic Intelligence report, "Renewable Energy in Oil and Gas," reveals that renewable power generation in 2020 was 7.4PWh, and it is expected to reach 16.1PWh in 2030 at a 10-year compound annual growth rate (CAGR) of 8.1%. The contribution of fossil fuels is expected to decline from 62% in 2020 to 50% in 2030.

Ravindra Puranik, Oil and Gas Analyst at GlobalData, comments:

"Rise in renewables development are influenced by factors, including global decarbonization efforts and rising concerns about energy security amid intensifying geopolitics. The cost of equipment and installation for solar and wind power projects has also declined due to improvements in underlying technologies as well as economies of scale, leading to lower levelized costs of renewable energy for the end-consumers."

Oil and gas industry leaders have caught on to the trend and diversified their energy portfolios to include renewable energy projects. Companies like TotalEnergies are among the frontrunners, with the potential to become one of the world's largest wind energy producers by the end of the decade if their ambitious project pipeline is realized. BP and Shell are also investing in renewable power capacity.

Although the pace of renewables investment by oil and gas companies has moderated over the past year - with BP, for example, recently pulling out of its Beacon Wind project offshore New York and Equinor adjusting its targets due to cost challenges - these companies continue to outperform their US-based counterparts.

Puranik concludes:

"Regional policy landscapes and financial realities are driving divergent outcomes for oil and gas companies investing in renewables. Supportive regulations and incentives in Europe and Asia are encouraging significant capital flows and project development, while in the US, high costs, regulatory uncertainty, and challenging permitting processes have triggered delays, pauses, or cancellations for various renewable initiatives. Despite these obstacles, leading oil and gas companies continue to progress with flagship renewable projects where the environment is most favorable."

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Notes to Editors

• Quotes provided by Ravindra Puranik, Oil & Gas Analyst at GlobalData
• Information based on GlobalData's thematic report: "Renewable Energy in Oil and Gas," which evaluates the role of oil and gas players in the renewable energy theme and further benchmarks efforts of oil majors, such as BP, Shell, TotalEnergies, Equinor, Eni, in the renewable energy value chain.
• It also identifies the key developments influencing this theme and provides an outlook of oil and gas industry commitments towards renewable energy adoption.
• This press release was written using data and information sourced from proprietary databases, primary and secondary research, and in-house analysis conducted by GlobalData's team of industry experts.

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