Big Oil has had an on-again off-again relationship with renewable energy for decades. It started during the Oil Crisis of the 1970s, and has continued to the present day.
BP Ventures, the VC fund for BP P.L.C., funded more than $325 million in startups. They are more interested in fuels and chemicals than renewable energy…
Nowadays, with a surge in startup tech investments in renewable energy and related technologies, the major oil companies are looking towards Silicon Valley in leveraging their funds for the future. Companies like BP, Royal Dutch Shell, Total, Exxon, and Chevron are putting up relatively large investments in renewable energy startups. And, for the first time, it appears that these investments are made for the long-term, rather than as a hedge. Big oil is going green.
Most oil exploration efforts are put into shallow and deep water wells. The exploration costs for shallow shelf oil wells are usually between $10-30 million, while deep water wells cost up to $100 million. Conversely, oil exploration on land can cost as little as $100,000 per well. With these costs in mind, it is interesting that the total amount of money put into venture capital (VC) for clean and renewable energy in 2016 was only $7.5 billion.
The big oil companies have varied investments and reasons which are in line with their policies, directions, and business models. Take Shell Technology Ventures (STV) as an example – they are a wholly-owned subsidiary of Royal Dutch Shell and their current investment strategy is to stay ahead of the curve in terms of possible disruptive technologies affecting energy. They invest their funds equally in oil and clean energy, and expect to shift to a 60-40 split in favor of clean energy in the next few years. Their investment fund has been described as being in the “hundreds of millions.”
STV invested in several other bold ideas: kite technology that generates energy via wind power, a company which has developed a method to employ solar energy generated steam for enhanced oil recovery, and a startup that develops energy monitoring systems for homes.
Another example is Total Energy Ventures International, a subsidiary of Total S.A. of France. They invested more than $160 million on startups, the majority of which are in the United States. Total limits its investments to minority stakes. Some of the technologies Total invested in include: California-based AutoGrid, which designs smart-grid software; United Wind, a wind-turbine leasing company which markets to small businesses and retail customers; and Tanzania-based Off Grid Electric, which installs rooftop solar panels and markets to low energy-access areas in Sub-Saharan Africa.
BP Ventures, the VC fund for BP P.L.C., funded more than $325 million in startups. They are more interested in fuels and chemicals than renewable energy, and have funded a technology that allows the chemical structure of wood chips to be changed, thus enabling them to make more durable and energy-efficient building materials. BP also invested $30 million in a bio-jet fuel producer which makes use of municipal waste as raw materials. Another company they invested in is Solidia, which is currently working on the reduction of the carbon footprint of concrete production.
Exxon Mobile, conversely, would rather keep the research to partnerships instead of direct investments. The research funds have gone to: Synthetic Genomics, which aims to make biofuels from algae; and FuelCell Energy, which is developing fuel cells from carbonate sources to produce electricity while capturing CO2 emissions from natural gas plants.
Chevron Corporation, yet another Big Oil company, is actively investing in startups. It invested in a variety of projects, including: a fuel cell company that uses ceramics in manufacturing, a manufacturer of fuels and chemicals from forest and agriculture residues, and a developer of a carbon capture tech that captures CO2 from industrial gas streams.
The bold intent of these oil supermajors is to ensure that they have the technology to ride the energy stream of the future, as well as to make the most of current oil and gas recovery efforts. Now, their interest in cross-platform development can help build the bridge from fossil-based fuels to renewables, and that will have bold impact on the entire world.