Shell: Building a New Energy Services Company Several Deals at a Time

When Shell created Shell New Energies in 2016, the focus was to speed Shell’s transition from a transportation-focused fossil fuel company to a new energy company fit for the future low carbon world. It has a budget of $1-$2 billion a year on average, and has up to 2020 to develop new activities in renewable energy, cleantech, digitization, and alternative transport fuels.

Last year was the busiest in the history of Shell Ventures, but 2019 also started with a bang. Shell has already made six investments to date: AutoGrid, Aurora, GreenLots, sonnen, Makani, and Limejump. Most of the investments or partnerships Shell has made since creating its New Energies unit have been with companies that are firmly focused on new solutions emerging across Energy Cloud platforms, such as Internet of Energy, Integrated Distributed Energy Resources (DER), Transport-to-Grid (T2G), and Buildings-to-Grid. Through New Energies, Shell’s other investments have been in offshore wind energy, where it aims to use its offshore oil platform developer and operators to continue growing in offshore wind.

A Customer-Focused Strategy

As a company used to large infrastructure projects, one could assume that Shell New Energies would focus on complex energy projects where it could deploy its core engineering skills, like it is doing with offshore wind. Instead, Shell has opted for a customer-focused strategy—both for commercial and industrial (C&I) and residential customers. Shell is not starting from scratch in this sector, it has been the second-largest wholesale electricity and power trader in the US for the last 25 years, so offering energy services will add depth to its current customer base. The depth of Shell’s recent partnerships and acquisitions are summarized by the following:

• New partnerships have been announced with Gridpoint and Sparkfund (as part of Shell Energy Inside), and with Silicon Ranch, Axiom Energy, and GI Energy, a US-based developer of microgrids and distributed energy services. A partnership with British C&I virtual power plant firm, Limejump, was announced at the end of February. These demonstrate how DER technology partnerships can be integrated into an onsite energy supply and load optimization solution for customers.
  

• The acquisition of First Utility, the current acquisition discussions with Eneco, and the recently announced acquisition of sonnen highlight how new solutions can be brought to energy supplier models. sonnen in particular has transformed itself from a battery OEM into an energy service and supply company over the last couple of years.  
  

• The acquisitions of Greenlots and NewMotion and the investment in Aurora positions Shell across a T2G platform to position itself to profit from any growth in EV sales—the most direct threat to the company’s oil business—across multiple customer segments.
  

• Shell’s investments in Autogrid, Geli, Innowatts, and—to an extent—Limejump provide the digital platform to produce the services efficiently across residential and C&I customer segments.
  

A Common Investment Trend

Shell is not the only one playing in the energy services empire building exercise. Most European utilities—like Enel, Engie, Centrica, and E.ON—as well as traditional oil majors (Total and BP) have been actively investing in a similar path, although few at the speed of Shell.