Exxon Mobil is looking to secure between 100 and 250 megawatts of delivered solar or wind power in Texas, according to reporting from Bloomberg.
Oil majors around the world are ramping up their investments in renewables and electrification. Exxon has been slower to move on commercialized technologies, although it is backing "hundreds" of low-carbon R&D efforts.
A recent report from GTM Research forecasted that solar prices could bottom out around $14 per megawatt-hour in coming years. Current wind bids in the U.S. are averaging $20 per megawatt-hour — with prices at the lower end near Exxon’s headquarters in windy Texas.
“In general, corporate interest in long-term PPAs for wind and solar is growing rapidly across all sectors,” said Colin Smith, a senior solar analyst at Wood Mackenzie Power & Renewables. “Corporate adoption of renewable PPAs is becoming an arms-race; more and more you need to do it in order to keep up with your competitors who are doing it to earn profit or lower long-term costs.”
According to Bloomberg, Exxon’s request for proposals closed June 8 and asked for contracts lasting 12, 15 or 20 years. It wasn’t clear what the electricity would be used for, or even if it would go to Exxon. The company declined to comment to Greentech Media, but said it “continually evaluate[s] opportunities to supply power for our facilities.”
It’s unclear if the capacity encompasses one project — in that case, Smith said it could be one of the largest projects for a commercial & industrial offtaker. It is more likely that the procurement includes multiple projects. If taken together, the 250 megawatts puts Exxon among other corporate offtakers like Microsoft, Apple, and Facebook who have all invested in hundreds of megawatts of clean energy.
“It’s not huge in comparison to others,” Smith said. “But not unsubstantial either.”
Smith said the report could indicate a strategic move from Exxon to embrace future visions like Shell's “Sky Scenario,” which would shift Shell's portfolio to include 32 percent solar and 13 percent wind by 2070.
The potential investment also follows on a larger trend of oil and gas majors increasingly pouring money into clean energy and grid edge technologies. In 2018, following a “spree” in 2017, BP invested in Freewire, Total invested in Ionic Materials, and Shell invested in Axiom Energy and GI Energy.
If Exxon does itself use the electricity, it would be among several oil and gas companies procuring clean energy for operations. “If we assume they are using it to power their own operations, this type of practice is becoming the norm,” said Smith. “Corporations see the lower energy costs or, at the very least, hedge against rising energy prices in order to be more competitive.”
BP, for instance, owns 2,259 megawatts of wind in the U.S. Royal Dutch Shell has invested in GlassPoint, a company developing solar for use in thermal enhanced oil recovery. In December, GlassPoint announced a project at the Belridge oil field in California. The operator of that field, Aera Energy, is jointly owned by Shell and Exxon.
What does the clean-energy future look like, according to Shell? Listen to an episode of The Interchange for analysis of the Sky Scenario.
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