Repsol is growing by leaps and bounds in its commitment to switch to ‘green’. In December of last year, it announced that it has been its largest operation in renewable energy so far, and this Wednesday it announced a new boost in its internationalization with projects in Italy. The Spanish oil company takes the lead among its European competitors, such as BP and Shell, which are more cautious when it comes to investing due to the rise in capital costs.
The company led by Josu Jon Imaz currently has a renewable portfolio of more than 2,000 MW, which places it 3,000 MW away from reaching its goal (6,000 MW) by 2025. By the end of the decade, the bar will be raised to 20 gigawatts ( GW). In total, it will invest 19.3 billion euros in renewable electricity generation and green hydrogen production during the 2021-2025 period.
With the purchase of Asterion Energies at the end of 2022 for 560 million euros (plus a maximum of 20 million in contingent payments), it added no more and no less than 7,700 MW in one go, divided between Spain (84%), Italy ( 12%) and France (4%). Specifically, 4,900 MW are from photovoltaic solar energy and 2,800 MW from wind generation. This operation was the ‘key’ that was waiting for Repsol to give a strong boost to its growth in the renewable energy business both in Spain and in other European markets, “stable and with great potential”.
In its commitment to be one of the most important players in the renewable energy market, the company, in addition to its activity in Spain, where it has 1,600 MW of installed capacity, including wind, solar photovoltaic and hydraulic, already has 62, 5 MW operating in the United States, 179 MW in Chile -through its joint venture with Grupo Ibereólica Renovables-, and 3 MW in Portugal, through its participation in the WindFloat Atlantic floating wind farm.
In addition, both in the US and in Chile, it aspires to develop new projects. In New Mexico, it is building the Jicarilla 1 photovoltaic plant, with 62.5 MW of installed capacity and 20 MW of battery storage. On the other hand, it is building the 637 MW Frye photovoltaic solar project in the state of Texas, which will come into operation in 2024; and has approved the final investment decision for the 629 MW Outpost solar park. In the Latin American country, the alliance with the Ibereólica Renovables Group gives Repsol access to a portfolio of projects in operation, construction and development of more than 1,600 MW until 2025 and the possibility of exceeding 2,600 MW in 2030.
Now, in Italy, it plans to build its first two photovoltaic solar plants, which will have 11 MW of power and will be located in the Puglia region, in the south of the country. However, once the entire portfolio comes into operation, 943 wind MW and 825 photovoltaic MW will be added. Of the 1,768 MW, more than 60% is in an advanced stage of processing. In the opinion of the oil company, Italy offers great potential to strengthen its position. To achieve its goal, it has needed to gain financial muscle and, in June 2022, it closed the sale of 25% of its renewable business for 905 million euros to the consortium formed by Crédit Agricole Assurances and the Swiss fund (EIP).
The incorporation of this partner into its green subsidiary entailed an investment commitment in line with the strategic plan of the Spanish multi-energy company, as well as the entry into new markets and the incorporation of complementary technologies, such as floating offshore wind power. In September it also divested part of its oil and gas business for $5 billion. The transaction added Exploration and Production assets in Malaysia and block 46 CN in Vietnam. In total they represented approximately 2% of the company’s net production worldwide.
On the contrary, Shell and BP “seem reluctant to increase spending on pure renewables,” they point out from Scope Ratings. UK oil companies prefer low-carbon investments that can be more easily integrated into their core activities and have shorter payback periods such as biofuels, biogas, hydrogen or electric vehicle charging. In the case of biofuels and electric mobility, yields of around 15% are observed, while hydrogen has profiles of up to double digits. However, unlevered returns from pure renewables are 6-8%, according to British Petroleum.
In fact, Lightsource bp, a firm owned 50% by Lightsource and BP, sold 247 MW of photovoltaic energy in Spain to Plenium Partners and Bankinter Investment earlier this year, while at the end of 2022 it transferred a 300 MW solar portfolio to Sonnedix in the United Kingdom. In this sense, BP foresees an investment of 2,000 million euros in its Castellón refinery for the production of green hydrogen and biofuels. The initiative will be part of the so-called Hydrogen Cluster of the Valencian Community (HyVal), which estimates “large-scale hydrogen production with an electrolysis capacity of up to 2GW by 2030.” For the same date, the intention is to reach a production of 650,000 tons of biofuel, which will mean tripling the real amount.
In the case of Shell, it has more than 46 GW of renewable generation potential in its portfolio, although for now ‘only’ 2.2 GW in operation, 3 GW under construction/contract and 40.9 GW of potential capacity in its portfolio. , ranging from full-scale solar projects, to floating wind projects and integrated wind-to-hydrogen projects. Of the former, divestments are being considered.