Shell Shifts Focus Away from Renewable Energy and Offshore Wind
Oil major Shell is making significant changes to its involvement in renewable energy and offshore wind projects, with a recent announcement indicating a shift in strategy. The company’s year-end 2024 financial report revealed impairment charges exceeding $1 billion, mainly related to renewable generation assets in North America.
CEO Wael Sawan described this move as part of a broader strategy of “simplification,” which has already resulted in over $3 billion in cost cuts since 2022. Shell stated that it is “high grading its portfolio” in terms of renewable energy investments.
One of the key decisions contributing to the impairment charge is Shell’s choice to pause its involvement in the joint venture for the development of the Atlantic Shores offshore wind project in New Jersey. The company, along with EDF-RE Offshore Development, had secured U.S. federal approval for the project, which aimed to deliver 2.8 MW of energy to New Jersey through nearly 200 turbines. However, Shell’s Chief Financial Officer Sinead Gorman explained that the project no longer aligns with Shell’s capabilities and desired returns, leading to the decision to write off the investment.
Despite Shell’s withdrawal, Atlantic Shores, the project’s developer, has stated its intention to continue progressing with the offshore wind project in compliance with existing agreements and permits. Trump’s opposition to the project highlighted the contentious nature of offshore wind development in the region.
Earlier in 2024, Shell also divested its 50 percent stake in the SouthCoast Wind Energy project to Ocean Winds North America, signaling a broader realignment of its renewables portfolio. While Shell’s exit from these projects reflects a broader trend away from renewable energy, the company’s financial performance for 2024 saw a 16 percent decline in profits. Factors contributing to this decline included lower margins for LNG, reduced oil and gas prices, decreased demand, and weaker refinery operations.
As Shell navigates these changes, it remains to be seen how the renewable energy landscape will evolve and how the company will continue to adapt its investment strategies in response to shifting market dynamics.