Does The Renewable Energy & EV Wave Include Shell & BP?

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Update: You can add to this story that Shell just bought sonnen.

By Grant Gerke

The electric car world stops when Tesla shareholder calls happen, but another significant development occurred in late January when Shell New Energies US, LLL, a wholly-owned subsidiary of Shell, acquired Greenlots, an electric car charging software and hardware company. The acquisition raises questions about fossil-fuel companies and their approach with the electric vehicle charging landscape and profit expectations going forward.

Shell and British Petroleum (BP) are incredibly profitable companies. They have been digging fast to diversify and find strategic investments into renewable energy companies over the last couple of years. In the charging space, BP recently bought UK’s Chargemaster for $147 million (in June 2018) and Shell also bought New Motion’s 30,000 fast charging plugs (in 2017).

Also, larger ambitions are on the horizon too. Total, Shell, and Norway-based Statoil also announced in 2017 a partnership to develop carbon capture and storage (CCS) technologies to combat climate change and achieve the targets of the Paris Climate Agreement. CCS is a technology that can capture up to 90% of the carbon dioxide (CO2) emissions pro­duced from the use of fossil fuels in electricity generation and industrial processes, preventing the carbon dioxide from entering the atmosphere, according to the Carbon Capture and Storage Association.

“Statoil believes that without CCS, it is not realistic to meet the global climate target as defined in the Paris Agreement. A massive scale-up of a number of CCS projects are needed, and collaboration and sharing of knowledge are essential to accelerating the development,” says Irene Rummelhoff, Statoil’s executive vice president for New Energy Solutions.

Reeling it back to electric car charging, a carbon capture system is a huge ambition and unproven technology at this point, but falls in line with the industry wealth of engineering resources, which makes it a natural fit for following this path and plays to their strengths … more on this later.

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Back to the Greenlots acquisition, are their profits to be made from car charging? Is this a sincere move into the renewable industry?

Brendan Jones, COO of Electrify America, in a recent interview with BNEF energy analyst Nathaniel Bullard, asked Jones how Electrify America plans to maintain EV charging-station utilization rates and hold down demand charges going forward.

“To have good utilization at all EV stations, you need robust EV car sales. That’s the number-one variable,” said Jones.

“When you get that,” he went on, “you have to drive down your expenses, so that [with] a 20 percent or 30 percent or even a 40 percent utilization rate in a 24-hour cycle, you begin to get revenue-positive at those stations.”

That’s going to take a lot of electric cars on the road, especially non-Tesla car sales. EV sales were up over 81% last year in the U.S., but that was due to the king of the EV road: Tesla. So, for EV charging to be profitable, legacy car companies and dealerships — cough — are going to have to sell these “mind-expanding, no-emissions, do-gooder cars.” [Dealership script: Do you want one of these over-priced vehicles? We’re not sure of they’re dependable, and can you even fix these cars?]

For the next one to three years, non-Tesla electric car sales are going to be slow. The lack of any real dealership leadership and training on the horizon is going to take its toll on sales. It’s going to take a long time for dealership cultures to change, if they ever do.

Back to charging and the cynical oil and gas perspective, these companies would like to push charging prices as high as they could to severely knee-cap electric car sales. They would love to create even more anti-EV noise. And an ultimate endgame would be to create nightmare scenarios at charging stations to drive EV demand lower. Basically, they could keep a lid on EV demand and drive it to the hybrid car of the early 2000s.

Of course, the unnerving foil for the oil and gas industry is Tesla and it network of Superchargers, not to mention the fun aspect of driving electric — one-pedal driving, no gas stations, and US energy supplies.

Tesla Supercharger

Just recently, Electrify America announced a new agreement with Tesla to supply 100 Powerpacks at some charging stations. Plus, Tesla is pouring a lot of resources into increasing the charge rate and will need to drive costs lower when truck fleets begin to use Supercharging stations. The move into truck fleets automatically presents higher priority for Tesla to reduce costs at charging stations, which could mean more microgrids and bigger reliance on solar in some areas.

Moving away from cynical take on the subject and towards new revenues, Shell and BP should be making moves in the EV charging space. The challenge with profitability at charging stations illustrates the need for engineering companies, especially with bigger moves to microgrids. Plus, Royal Dutch Shell just announced a big buy into offshore wind power off the coast of New Jersey. Along with Electricite de France SA, Shell bought a wind lease for $215 million and should help kickstart a huge “wave” of offshore wind power.

Let’s hope these trends continue and the need for oil and gas companies to diversify becomes more and more a part of their culture.

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