Shell Defection Just a Squall for Renewables?

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Less than 18 months after approval was granted for a $4 billion-plus wind farm 12 miles off the south coast of England, Shell, one of three partners in the venture, says it’s pulling out.

The news has stunned the international energy giant’s German and Danish project partners and cast a shadow over the UK government’s renewable energy target of 20 percent by the year 2020.

But the effects could be even more far-reaching: the involvement of multinationals like Shell and BP has provided both financial support and a degree of legitimacy to the burgeoning alternative energy industry.
The message some analysts are taking from Shell’s decision is that mainstream energy giants may be stepping back from pioneering renewables to concentrate instead on reaping vast profits from their core fossil fuels.

Some UK newspapers see a connection between this latest announcement, Shell’s earlier sale of much of its solar business, the company’s increased investment in Canadian oil-rich tar sands … and oil prices hovering north of $120 a barrel.

The thought is that eventually large energy corporations may simply dip into their bloated coffers to buy their way back into wind, solar and hydro projects, but in the meantime play a more muted role in research and development.

If that picture is true, there may be repercussions on this side of the Atlantic, where Shell and BP are prominent among multinational corporate investors in renewable energy.

However, Christine Real de Azua, assistant director of communications for the American Wind Energy Association, remains confident that these high-rollers are not about to take their chips off the table.

“We see no indication of a softening in the market,” she said, detailing, for example, Shell’s extensive commitment to wind farm development in Texas. “We don’t foresee any negative repercussions here.”

Real de Azua also points out that offshore wind farms cost more to develop than those on land. Though sites at sea are generally considered more productive, the steeper upfront costs mean investors (like Shell) “need to look at each case carefully.”

In another ill wind for renewable energy, the ruling party in Germany wants to axe the solar-energy subsidies that have made the Northern European country the world’s top solar-energy producer.

The German Democratic Union wants to speed up the erosion of a generous subsidy for individuals producing more solar-generated electricity than their home needs. The incentives jump-started solar in Germany, and party argues that the industry is mature enough (and the subsidy costly enough) for it to fade away sooner.

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