A recent report from Bloomberg suggests that ExxonMobil is looking to secure between 100 and 250 megawatts of delivered solar or wind power.
Although investigations have reported that Exxon knew about climate change as far back as the 1970s, the U.S. major has been among the more hesitant fossil fuel companies to dip into renewables (although it has invested in low-carbon energy research). European majors have been most willing to consider clean energy. Recent reporting indicates that even the most stubborn oil and gas companies may be re-evaluating their strategies in the face of falling clean energy costs.
A recent report from GTM Research forecasted that solar prices could bottom out around $14 per megawatt-hour in the coming years. Current wind bids are skimming $20 per megawatt-hour — especially near Exxon’s headquarters in windy Texas.
“In general, corporate interest in long-term power-purchase agreements for wind and solar is growing rapidly across all sectors,” said Colin Smith, a senior solar analyst at Wood Mackenzie Power & Renewables. “Corporate adoption of renewable PPAs is becoming an arms race; more and more, you need to do it in order to keep up with your competitors, who are doing it to earn profit or lower long-term costs.”
According to Bloomberg, Exxon’s request for proposals closed June 8 and asked for contracts lasting 12, 15 or 20 years. It wasn’t clear what the electricity would be used for, or even if it would go to Exxon. The company declined to comment to Greentech Media but said it “continually evaluate[s] opportunities to supply power for our facilities.”
It’s unclear if the capacity encompasses one project, in which case Smith said it could be the largest single project for a commercial and industrial offtaker, or multiple projects, which he said is more likely. If taken together, the 250-megawatt cap puts Exxon among other corporate offtakers like Microsoft, Apple,and Facebook that have all invested in hundreds of megawatts of clean energy.
“It’s not huge in comparison to others,” Smith said. “But it's not unsubstantial, either.”
Smith said the report could indicate a strategic move from Exxon to more directly compete with future visions like Shell’s “Sky Scenario,” which has the company shifting its portfolio to include 32 percent solar and 13 percent wind by 2070.
The potential investment also follows on a larger trend of oil and gas majors increasingly pouring money into clean energy and grid edge technologies and companies.
If Exxon does intend to use the renewable electricity directly, it would be one of several oil and gas companies turning to clean energy.
“If we assume they are using it to power their own operations, this type of practice is becoming the norm,” said Smith. “Corporations see the lower energy costs or, at the very least, hedge against rising energy prices in order to be more competitive.”
As the largest natural-gas producer in the U.S., Exxon may also see greater value in selling that resource to customers than using it internally.
Other oil majors see value in investing in renewables, too. BP, for instance, owns 2,259 megawatts of wind in the U.S. Royal Dutch Shell has invested in GlassPoint, a company developing solar for use in thermal enhanced oil recovery. In December, GlassPoint announced a project at the Belridge Oil Field in California. The operator of that field, Aera Energy, is jointly owned by Shell and Exxon.
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