More energy companies globally to switch to renewables - Fitch

Economy Materials 20 June 2022 14:47 (UTC +04:00)
More energy companies globally to switch to renewables - Fitch
Maryana Ahmadova
Maryana Ahmadova
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BAKU, Azerbaijan, June 20. More energy companies globally will change their business strategies and implement low-carbon methods, Trend reports via Fitch Solutions.

“More stringent government environmental policies, increasing regulatory requirements, rising carbon taxes and growing adoption of carbon pricing mechanisms will pose climate-related risks for high carbon emitters,” the research said.

According to Fitch Solutions, the demand for high-emission products will fall, and companies will face reduced demand and lower prices, which will lead to lower profitability, deterioration of balance sheets and potential loss of assets.

Meanwhile, as the research confirms, many companies switch from traditional fossil fuels to electricity generated by renewable energy grid. To facilitate this transition, the renewable energy sector has faced an infusion of capital from major oil companies.

“This has taken the form of them being sponsors of renewable power projects globally. One such example is bp's acquisition of a 40.5 percent stake in the 26 GW Asian Renewable Energy Hub (which will have a mix of solar and wind power projects) in Australia. In total, we register in key projects data that oil majors are involved across $25.6 billion worth of renewable power projects that are currently in the pre-construction and construction stages, although this value is likely higher as not all firms publicly announce project value,” the research said.

Thus, Fitch Solutions expects that the growth of the renewables sector will be backed by major investments from oil and gas companies, “as they develop increasing levels capacity in house or utilize subsidiaries”.

“This expansion will be evident over the coming years as oil majors commission a 70 GW strong pipeline of non-hydropower renewables projects, as captured in our key projects data. Notably, the project pipeline for offshore wind power projects is the strongest among other types, at about 48 GW. We believe that this is largely attributed to the synergistic expertise that oil majors have in the construction of offshore projects,” the research noted.

Fitch Solutions forecasts the trend of major energy companies supporting renewables growth to continue growing in the upcoming years, “with the offshore wind and solar PV sub-sectors experiencing the largest growth,” the research concluded.


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