Last year, Saudi Arabia said it expected more than $20 billion in investments in renewables over the next decade with an ambitious goal of generating 30 GW from renewables by 2025 and 60 GW by 2030.
Norway’s Equinor had set ambitions for profitable growth within renewables and expected to reach an installed capacity of 4 gigawatts to 6GW by 2026 and 12GW to 16GW by 2035.
Driven by the opportunities within the energy transition and increasing demand for electricity from renewable energy sources, Equinor is building up its renewable business focusing on offshore wind, both bottom-fixed and floating and onshore renewables.
These ambitions by other national oil companies cast an uncomfortable glare on the Nigerian National Petroleum Corporation (NNPC) whose most ambitious plan in the renewable energy space so far, has been a biofuel project that has been in the works for about a decade.
In a meeting with the Kebbi state governor Abubakar A. Bagudu, last month, Mele Kyari, the NNPC GMD, said the corporation was committed to the global transition development to renewable energy, citing that the rice development value chain in the state would be vital to actualising the scheme and boosting economic development in the area.
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Touting a biofuel project that has been stuck for years as proof of commitment to renewables, pales into insignificance when compared to the big-ticket projects its contemporaries are announcing.
Saudi Aramco in January said it was launching a new $500m fund that will promote energy efficiency and renewable technologies.
It created a corporate venture capital arm Saudi Aramco Energy Ventures (SAEV) that will power the scheme and enhance the firm’s growing clean energy portfolio. The new investment follows a $500m launch budget in 2012, which SAEV has used to make 45 investments across the globe — most of which have been in the US and Europe.
But it is not just NOCs, oil majors too, some who are NNPC’s partners, are ramping investments into renewable technologies. BP, Shell, Chevron, Total, Eni, and Exxon are pumping billions into clean energy projects.
Matthias Pickl, an economics professor at King Fahd University of Petroleum and Minerals in Saudi Arabia, said in a report that wind and solar are taking an increasingly important role in the energy industry and that oil majors are “progressively positioning themselves for the proclaimed energy transition”.
“Oil firms are essentially attempting to figure out how the best presently available cash cow in the world can be replaced for the benefit of their own sustainable future,” he said.
“Furthermore, growing concerns about climate change following the Paris Agreement may provide an additional drive for such strategy to hedge against hardening investor sentiment towards carbon emissions.”
For example, BP spent $200m in 2017 on acquiring a 43 percent stake in Lightsource, which has rebranded to Lightsource BP and is Europe’s largest solar power project developer.
Shell’s investment target for green energy projects was set between $4bn and $6bn for the period from 2016 until the end of 2020. In 2018, it bought a 44 percent stake in US solar power firm Silicon Ranch for $200m and made a $20m equity investment in India-based renewable power company Husk Power Systems. It is also providing seed capital for investments into smaller renewable energy firms in Nigeria through All On, an impact investment firm.
Yet unlike other state-owned oil firms, the NNPC faces grave challenges. It has to pander to the will of politicians even when it is inimical to its goals like paying wasteful petrol subsidies rather than investing in the energy transition.
Lawmakers are considering a new Petroleum Industry Bill that will redefine the functions of the NNPC. There are hopes this will put the corporation on a path for a sustainable future.
