As renewable energy grows, so does interest from Big Oil

As the potential for wind and solar energy grows — and the cost of the technology falls — experts anticipate a growing number of traditional oil and gas companies to invest in the renewables sector.

Morgan Bazilian, former lead energy specialist at the World Bank, told an audience of oil executives this week in Calgary that the industry has already seen some of the sector's largest companies — Shell, Total, BP and others — make billion-dollar investments in renewables.

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Bazilian expects more companies with a focus on natural gas to follow suit.

"Every company in the gas space is looking at it," he later told reporters at the ARC Energy Investment forum on Wednesday.

"They're not naive about this. … They're keenly aware that these investments are happening."

Bazilian, executive director of the Payne Institute for Earth Resources at the Colorado School of Mines, said he also expects to hear more discussion about how the natural gas and renewable energy sectors can complement each other.

"The reality is that we're getting a lot better at integrating wind and solar into power systems — period," he added.

"That is because of how we're planning systems, how we're operating systems on a day-to-day basis, and how we're regulating the systems.

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"And so technologically you can absorb or integrate a lot more of these variable sources — like wind and solar — than we had previously thought, much more."

The comments come amidst growing investment in renewable energy technologies across the globe, aided by the falling cost of the technology.

A recent analysis by Bernstein Research pegged Big Oil's investment in renewables acquisitions over the past five years at $3 billion US, most of which went toward solar.

Jackie Forrest, senior director of research at ARC Energy Research Institute, said the cost of solar power has dropped by 90 per cent. Wind has dropped by half.

"The fact that generation costs have come down so that the power price required to justify an investment in solar or wind is cheaper than a natural gas [co-generation plant] — that's a big change in the paradigm out there," Forrest said in an interview.

However, Forrest believes natural gas will continue to be important for some time.

"There's a role for natural gas because wind and solar are not available 24/7 and natural gas is a great partner in terms of offsetting those renewable sources when they're not there," she said.  

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"But I think we're going to see more growth in renewables because it is competitive and it doesn't need those government subsidies to justify these projects moving forward."

BluEarth Renewables CEO Grant Arnold, who has been involved in renewable energy projects across the country, said he has already seen a lot of new capital coming into the sector, including investments from pension funds and life insurance companies.

And he expects more interest from oil and gas companies, too.

"Bottom line is, I expect more people to do it," Arnold said. "Would I bet on which players will do it or won't do it? It's too hard to tell. But more of them are doing it every day."