Statoil Makes First Solar Investment, Highlights a Growing Trend

Norwegian oil major Statoil has purchased its very first stake in a solar project, agreeing to pay $25 million to acquire 40% of the 162 MW Apodi solar asset in Brazil. The deal is the latest example of a growing trend of major oil and gas companies taking stakes in renewable energy projects.

“The Apodi asset is a sensible first step into the solar industry and can demonstrate how solar can provide Statoil with scale-able and profitable growth opportunities,” Irene Rummelhoff, executive vice president of New Energy Solutions at Statoil, said in a press release.

Statoil agreed to purchase the project stake from Norwegian independent solar power producer Scatec Solar in October. The purchase price also included a 50% share in the project execution company, which will enable Statoil to participate and the building and operation of more Brazilian solar projects in the future.

“The potential for solar energy in Brazil is substantial and together with Statoil we are increasing our ambitions further in this market. We are bringing into the partnership a strong track record as an integrated independent solar power producer, while Statoil has a strong engagement and experience from Brazil through its other energy activities,” said Scatec Solar Chief Executive Officer Raymond Carlsen.

About the Adopi Solar Project

The Apodi solar project is set to provide electricity for about 160,000 households. Construction of Apodi was set to start in October 2017, with completion expected by the end of 2018. The total capital expenditure budget for the development is estimated at $215 million. Funding for the project is comprised of 65% project financing and a 35% equity contribution. Statoil’s portion of the equity share is estimated at $30 million.

The Apodi solar project is in the Quixeré municipality of the state of Ceará in northeast Brazil. It is fully-permitted with a grid connection and has a 20-year power purchase agreement (PPA) awarded in 2015 at an auction organized by the Brazilian government. The PPA had an inflation adjusted offtake price equivalent to $104 per MWh in 2017.

In recent years, Statoil estimates about 3GW of solar projects have been awarded in Brazil in three consecutive utility scale solar auctions. Another 7GW is planned to be awarded by 2024.

Following the transaction, Statoil will hold a 40% share in the project alongside Scatec Solar (40%) and ApodiPar (20%).

Statoil’s Green Energy Ambitions

Though the Apodi project is Statoil’s first solar venture, it is not the company’s first foray into renewable energy. Since 2012, Statoil has amassed a sizable wind portfolio that includes three UK wind farms, one of which is the world’s first floating offshore wind farm, Hywind Scotland. In 2016, the company also purchased a 50% stake in the Arkona offshore wind farm planned in Germany, which is set to come online in 2019.

Statoil’s wind portfolio is capable of providing power to more than 1 million homes.

“As part of Statoil’s strategy to actively complement our oil and gas portfolio with profitable renewable energy sources, we have so far focused on offshore wind where we have a unique competitive advantage building on over 40 years with oil and gas activities, “Rummelhoff said.

More Supermajors are Investing in Renewables

Statoil is just one of several major oil and gas companies that are making moves into the renewables business. In December 2017 alone, several notable investment in the sector were inked by BP, Royal Dutch Shell and Saudi Aramco.

That month, Saudi Aramco Energy Ventures (SAVE) led a financing round that raised $8 million euros (US$9.6 million) for a German company that is commercializing a new technology for the fabrication of silicon wafers for photovoltaics called NexWafe.

Shell Technology Ventures B.V., the corporate venture capital arm of Royal Dutch Shell, was likewise part of a group of investors that invested a combined $9 million in a Series B equity round for SolarNow, a Dutch company that installs off-grid solar energy systems in East Africa.

Meanwhile, BP paid $200 million for a 43% equity stake in Lightsource, the largest solar development company in Europe that is focused on acquiring, developing and managing large-scale solar projects.

Like Statoil, BP’s move is also part of a concerted effort to invest in renewables. BP has an Alternative Energy Business with interests in onshore wind energy across the US capable of generating 2.3GW, and as well as stakes in Brazilian biofuels plants that produce around 800 million liters of ethanol equivalent per year.

Green Energy is Gaining Steam

These deals comes as technological improvements and lower costs are transforming solar into an attractive power source that can compete with traditional sources of energy in important markets. BP’s Statistical Review of World Energy notes that global installed solar generating capacity more than tripled from 2013 to 2016, rising by more than 30% in 2016 alone.

The growing viability of renewable energy sources is evident across the globe, and the appetite for these projects is increasing globally as countries work to meet commitments made during the Paris Agreement in 2015 amid growing concern about climate change.

Now, the building momentum for these installations has even caught the eye of supermajors like Statoil, indicating that an undeniable wave of change is underway in the way the world thinks about energy.

First-of-its-Kind Solar Installation to Power California Heavy Oil Project

One of California’s largest oil and gas producers is preparing to build the state’s biggest solar energy project at an oilfield near Bakersfield.

Aera Energy is teaming up with GlassPoint Solar to build the project at the Belridge oil field. Once complete, it will be the first installation of its kind in the world to use solar steam and solar electricity to power oilfield operations. The installation is expected to save more than 376,000 metric tons of carbon dioxide emissions per year, offsetting the equivalent of 80,000 cars, more than one-third of the cars in Bakersfield today.

“Our partnership with Aera demonstrates the growing energy convergence where renewables and traditional energy leaders are working together to address some of the biggest challenges of our time,” said Sanjeev Kumar, senior vice president of Americas for GlassPoint.

Once complete, Aera says the Belridge Solar project will deliver the largest peak energy output of any solar plant in California.

The installation will consist of an 850 MWt solar thermal facility that will produce 12 million barrels of steam per year and a 26.5 MWe photovoltaic facility to generate electricity. The combined solar-generated steam and electricity will reduce the amount of natural gas now being used onsite for oilfield operations.

“Aera is committed to safe, responsible operations and is thrilled to extend our environmental leadership by using solar to power our production. Adding solar energy at Belridge allows us to continue to lead the way in the safest, most environmentally responsible energy extraction there is,” said Aera Energy President and Chief Executive Officer Christina Sistrunk.

Belridge is a heavy oil field which requires the injection of steam into the reservoir to heat the oil so that it can be pumped to the surface. This process, known as thermal enhanced oil recovery (EOR), typically generates steam using natural gas. By using the thermal energy of the sun to replace the combustion of natural gas, GlassPoint’s technology will allow Area to reduce its energy consumption and carbon footprint at Belridge.

The planned facility at Belridge will reduce NOx and other local pollutants, improving air quality in the San Joaquin Valley, one of California’s most challenged air districts.

California is the third-largest oil producing state in the US, with 2016 output of 510,000 barrels of oil per day, according to data from the US Energy Information Administration. Heavy oil fields like Belridge account for half of the state’s crude oil production.

Aera is one of California’s largest producers, and it is responsible for 25 percent of the state’s oil and gas production. The company expects to break ground on the Belridge Solar plant in the first half of 2019. The project is slated to start producing steam and electricity as early as 2020.

Glass Point says the oil and gas industry is a prime market for renewables because it consumes up to 10% of its own energy projection. Glass Point unveiled its first commercial solar oilfield project in 2011 with Berry Petroleum in California’s Kern County and now has more than 1 gigawatt of solar oilfield projects under construction around the globe. Last year, the company was recognized by the World Economic Forum as a 2016 Technology Pioneer for its role in enabling more economical and sustainable oil production.

“By harnessing the power of the sun to produce oil, oil operators can efficiently reduce emissions using advanced technology, creating long-term benefits for the local economy and environment,” senior vice president Kumar said.

  • Be the first to know about news, events and more.

    X
    We respect your privacy. View privacy policy.

     

  • Most Popular Topics

    Editor Picks