Oil majors will likely continue to maintain or accelerate their renewable-power growth targets even as the pandemic keeps depressing crude and gas markets, though renewable capacity of the five-largest oil companies combined is unlikely to overtake the aggregate of the top-five utilities by 2030.
European oil companies are set to expand their renewable power generation capacity by about about 40% annually in 2020-25 vs. 10% for major utilities, in our view. This is due to oil majors having a low starting point and being prepared to aggressively expand their renewable and low-carbon generation capacity by actively participating in new power tenders and acquisitions of smaller green developers. Nevertheless, if oil majors continue to maintain such a breakneck speed throughout the rest of the decade, it still wouldn't be enough for them to overtake utilities by 2030, according to our calculations based on the targets reported by the companies.
While Enel, Engie, Iberdrola and EDP may continue to maintain their leadership among Europe-listed companies as the owners and operators of the largest wind, solar and hydropower fleet through 2025, oil companies may become serious rivals to utilities within the next five years, in our view. If Total and BP meet their aggressive renewable-growth targets, they may catch up with or overtake the likes of RWE by the mid 2020s. By contrast, Shell, Eni and Equinor may continue to lag unless they up their green-growth ambition.
Eni's ambitious wind and solar-capacity expansion goal is a standout amid the green-growth targets of European oil through 2025 that exceed those of utilities, BI estimates show. Our calculations are based on renewable capacity targets, which aren't necessarily comparable among the companies in these two industries. The green targets of BP and Engie are over-inflated as they include both deployed and managed. By contrast, Enel and Equinor's green-growth plans exclude any capacity that they sell but continue to operate on behalf of the new asset owners.
