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Shell grows green power business with Australian wind farms deal

Global energy giant Shell is continuing its push deeper into Australia’s power market with a deal to buy a significant stake in wind-farm developer WestWind.

The acquisition, set to be announced on Tuesday, marks an acceleration of the London-based oil and gas giant’s efforts to build up its power generation and retailing businesses in Australia to capitalise on the opportunities presented by the green-energy revolution.

Shell Australia’s chairman, Tony Nunan, said the company was acquiring a 49 per cent interest in WestWind, which has 600 megawatts of wind farm projects already producing energy across the country and a pipeline of 3000 megawatts of new projects spanning Victoria, NSW and Queensland.

“That’s the bit that excites us – to be able to join with WestWind and partner with them as they bring that funnel towards development,” Mr Nunan said.

Shell is one of the world’s biggest oil and gas companies, with liquefied natural gas (LNG) assets in Queensland and off the coast of Western Australia. Like many other global energy majors that make nearly all of their profits from fossil fuels, Shell is using its scale in oil and gas to build up its power businesses across America, Europe and Australia and diversify into wind, solar, hydrogen and other clean-energy technologies.

In 2019, Shell bought into the Australian power market by acquiring ERM, the nation’s second-largest electricity supplier to commercial and industrial customers. It is also developing the Gangarri solar farm in Queensland, has bought a local carbon farming company and this year completed its acquisition of energy retailer Powershop.

“Australia is a core market for us,” said Mr Nunan, adding that Shell would continue scanning the market for other merger-and-acquisition opportunities.

“Where we see an opportunity that makes sense, that we can see a connection to our customers, where we can help them to decarbonise, we’ll go after it.”

WestWind Energy Australia managing director Tobias Geiger said it was an “exciting day” for Australia’s transition to a clean-energy economy. “We will now be able to grow our team to undertake a larger number of projects, and progress them faster,” Mr Geiger said.

The value of Shell’s WestWind deal has not been disclosed but is expected to have been in the tens of millions of dollars.

It comes amid renewed debate in Australia about the pace of the green energy transition and the electricity grid’s ability to handle the shift away from emissions-intensive coal-burning power plants to more large-scale renewable energy sources.

Since Origin Energy in February said it would close its Eraring coal-fired generator in NSW seven years sooner than originally planned, the Morrison government has been ratcheting up warnings that any early closures of coal plants, which supply the bulk of the nation’s electricity, raise the risk of power shortages at times of insufficient sun or wind, and higher bills for consumers.

Mr Nunan said customers wanted power to be as clean as possible, but also reliable and affordable. “The challenge for us is to deliver that system and to do it in an orderly fashion,” he said. “I think what it comes down to is all players doing their bit, existing suppliers being able to clarify their intentions as we have seen with recent announcements, and then it comes to others in the market to see the opportunity to bring on additional supply. Those signals are really important.”

Source: Sydney Morning Herald