Shell's Pivot to Renewables Sharpens With California Deal
(Bloomberg) -- Royal Dutch Shell Plc, the world’s second-biggest oil company, is expanding its bet on renewable energy.
Shell’s North American unit agreed to provide a credit line for trading and a revolving loan facility to Inspire Energy Holdings LLC, according to a statement Wednesday. The Santa Monica, California-based clean-power, smart-home and energy-management company will use the funds to expand its reach. Terms weren’t disclosed.
While Shell and its major rivals still have the bulk of their investments in oil and natural gas, they are taking steps to diversify. Shell agreed in January to buy a 44 percent stake in Nashville-based Silicon Ranch Corp., which owns and operates about 100 U.S. solar plants. A month earlier, the Anglo-Dutch company bought First Utility Ltd., the U.K.’s seventh-largest power provider. And that followed deals last year for electric-car charging networks in Europe.
The Inspire deal is “further confirmation that it is taking the risks to long-term oil demand seriously amid accelerating electrification of the transport industry and emerging policy pressures to de-carbonize global energy,” Will Hares, a London-based analyst for Bloomberg Intelligence, said in an interview.
Big Oil has some specific targets for this transition: charging points alongside gasoline pumps, as well as apps and smart-home devices that generate energy-use data. Shell has announced plans to spend as much as $2 billion a year for what it calls “new energies” -- the most among the super majors. BP Plc, for example, has allocated about $500 million a year.
Shell said more than half of Americans intend to buy “smart” and “energy efficient” products in 2018, citing a survey.
Inspire, which is backed by investors including CrossCut Ventures, offers clean energy services to monthly subscribers in seven states. Users can manage their power consumption through a smart-phone app. Shell’s support will help facilitate Inspire’s purchase of clean-energy products.
“The average American homeowner burns 8,000 pounds of coal annually,” Patrick Maloney, Inspire’s founder and chief executive officer, said in an interview Monday. “If we could give them a simple solution to avoid that, they would take it.”
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