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Business

Shell buys stake in solar developer Silicon Ranch

Firm is among European oil and gas firms turning to renewables to diversify earnings sources

by Melody M. Bomgardner
January 17, 2018 | APPEARED IN VOLUME 96, ISSUE 4

Credit: Silicon Ranch
Silicon Ranch and partner Green Power EMC built this solar facility in Hazlehurst, Ga.

Shell will buy a 43.8% stake in the U.S. solar developer Silicon Ranch from private investment firm Partners Group for $217 million. With the move, Shell joins other European oil majors that are looking to renewable energy to diversify their future sources of revenue.

“With this entry into the fast-growing solar sector, Shell is able to leverage its expertise as one of the top three wholesale power sellers in the U.S., while expanding its global new energies footprint,” says Marc van Gerven, Shell’s vice president of solar. Silicon Ranch builds and operates large-scale solar installations on behalf of electric cooperatives, corporations, and the military. The company says it has 880 MW of projects underway in 14 states and a development pipeline of 1 gigawatt. Shell’s move comes four months after France’s Total bought a 23% stake in the solar and wind energy producer EREN RE for $285 million. Total also owns a majority stake in the solar panel maker SunPower. In 2010, the British oil company BP famously shuttered its solar power business, claiming it was unable to make profits manufacturing solar panels. The company closed all of its solar manufacturing facilities and laid off 1,750 workers. But in December 2017, BP returned to the sector, buying a stake in the solar project company Lightsource for $200 million. “We’re excited to be coming back to solar, but in a new and very different way,“ said BP CEO Bob Dudley at the time. The U.S. continues to be a hot market for large solar projects. According to market tracking firm GTM Research, about 8.1 GW of utility scale installations were deployed in 2017. The company expects new U.S. installations to dip to 6.5 GW this year before rebounding to 9.0 GW in 2019. The new U.S. tax bill preserves previously threatened tax credits for wind and solar energy production. Shell’s solar investment is a drop in the barrel compared to its profits from oil and gas extraction. Despite low average oil prices of $52 per barrel, the company’s 2017 third-quarter earnings were $4.1 billion.

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