GlobalData: pace of renewables investment by oil and gas majors has moderated

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 in that period, renewable energy has nearly doubled. Renewables are expected to account for more than 40% of the global power generation by 2030. This rapid ascendancy is mainly propelled by substantial planned expansions in solar and wind energy worldwide.

Total global power generation in 2020 was 25.6 PWh, and it is expected to reach 38.2 PWh in 2030 at a ten-year CAGR of 4.04%. Of this, renewable power generation in 2020 was 7.4 PWh, and it is expected to reach 16.1 PWh in 2030 at a ten-year CAGR of 8.1%. The contribution of fossil fuels is expected to wane during this time, falling from 62% in 2020 to 50% in 2030. These developments are influenced by factors, including global decarbonisation 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 levelised costs of renewable energy for the end-consumers.

Oil and gas industry leaders have caught on to the trend and have diversified their energy portfolios to include renewable energy projects. Companies such as 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 realised. BP and Shell are also investing in renewable power capacity.

Although the pace of renewables investment from 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.

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 favourable.?

Further discussion on initiatives from oil and gas companies in line with renewable energy adoption and related trends can be found in GlobalData’s latest theme report, ‘Renewable Energy in Oil and Gas’.

Read the original release from GlobalData here.

Read the article online at: https://www.hydrocarbonengineering.com/special-reports/27052026/globaldata-pace-of-renewables-investment-by-oil-and-gas-majors-has-moderated/