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Shell Revs up Bets on Renewables, Buys Stake in Cleantech

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In a bid to bolster renewable energy business, Royal Dutch Shell plcRDS.A recently inked a deal to snap up 49% stake in Asia-based solar energy company, Cleantech Solar. The transaction is valued at $100 million and scheduled for closure in January 2019, subject to satisfactory closing conditions and regulatory approvals. The deal represents Shell's second major solar investment in 2018. Markedly, the company signed a deal early this year to acquire 43.8% stake in Silicon Ranch Corporation, which is a leading solar energy company in the United States.

Notably, Shell has the option to boost its stake in Cleantech after 2021. Headquartered in Singapore, Cleantech owns more than 120 solar plants across South East Asia, representing in excess of 200 megawatt (MW) capacity, and is poised for significant expansion to more than 500 MW in the next couple of years.

The deal is in sync with Shell's intention to ramp up its renewable foothold. In fact, the company will invest up to $2 billion per year till 2020 in its New Energies division, which will also serve as a hedge for reduced gasoline and diesel fuel demand. The Zacks Rank #5 (Strong Sell) company believes that pumping money into the New Energies unit is likely to significantly increase its customer base and drive revenues. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

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In fact, Shell has been on an acquisition spree of late, having collaborated with IONITY, New Motion, First Utility and Silicon Ranch, as it attempts to diversify its portfolio beyond oil and gas. With renewable energy becoming affordable, the oil conglomerate sees immense potential in developing projects like hydrogen fuel-cells, alternative energies, liquefied natural gas and next-generation biofuels. Shell's New Energies division has also made investments in U.S. thermal storage specialist Axiom Energy, microgrids and distributed energy services player GI Energy, hydrogen compression specialist HyET and German home storage developer Sonnen.

In fact, amid climate change concerns, other big oil companies like TOTAL SA TOT , Equinor ASA EQNR , BP plc BP , Exxon Mobil Corporation and Chevron Corporation have also started reorienting their strategies to de-carbonize the energy system via increasingly shifting to alternative fuels.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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