Why Shell has started a new energies business
Oct 4, 2017
Mark Gainsborough, Shell's Executive Vice President of New Energies, on how the company will deliver more and cleaner energy solutions.
A colleague of mine mentioned an interesting job agency the other day. It is based near Eindhoven in the Netherlands. It guarantees its clients will never be late. It promises that they'll never fall ill. It says they'll never go on strike. And they'll never take holiday.
Yet, in the two years since it started, it has failed to place a single person in a single job.
That's because it is a job agency for robots. If you need a machine for the job, any job, this agency will source the perfect one. You can borrow it for as long as you need, and return it when the job is done.
Will this concept fly? Will this company be successful? It's hard to predict. But it is important to encourage ventures that will take risks. For without measured risk, there is rarely the game-changing breakthrough.
And that's where my job comes in. I run Shell's New Energies business. Shell's purpose is to deliver more and cleaner energy solutions. New Energies is at the forefront.
Three areas of exploration
We're actively exploring three main areas of opportunity. First, new fuels for transport. The importance of moving the world's growing number of people and goods must be balanced with efforts to reduce carbon dioxide (CO2) and local emissions.
Our activities range from developing advanced biofuels -- that's fuels made from the growing and processing of plant materials -- to launching hydrogen refilling stations that could power the cars of the future.
You may have heard that the British inventor James Dyson has announced a £2 billion investment into the development of an electric vehicle that is set to be launched in 2020.
We're starting to provide electric-vehicle fast-charging on Shell retail sites and working on smart charging to help the electricity grid cope with the demands of battery electric vehicles.
Shell is exploring renewable power. This includes wind and solar. We already have an established wind business and are working on new projects, which include the Borssele wind farms offshore in the Netherlands.
In solar, we are building on our previous experience and developing integrated energy solutions, while increasingly using solar in our own sites and operations.
We're also co-developing models to help customers manage their energy-use better. At the same time we are looking at commercial opportunities to bring power to remote communities.
Third, we are involved in ventures to connect customers with new business models for transport and energy services, enabled by digital technologies.
That includes FarePilot, a UK-based startup that guides taxi drivers to places where they are most likely to pick up their next customer. It is designed to help drivers find fares quicker, drive less to their next pick-up and carry more passengers in a shift.
That's a potential lowering of emissions by more effective matching of supply and demand.
Borrowing from Silicon Valley
But how do we approach such changes? Here at Shell, we cite three important priorities. First, embracing the Silicon Valley concept of agility. Second, getting involved in new areas and learning. Third, collaboration.
Implementing the Silicon Valley approach has meant creating some pockets of the business which feel quite different to the established structures.
There is Shell Technology Ventures, for example. Its job is to invest in companies with bright ideas and step-change technologies.
STV is why we are involved with a UK company called Kite Power Systems, developing a new way of harnessing wind power using giant kites.
STV is also behind our investment in tiramizoo, a German start-up whose online technology connects retailers with customers. The tool efficiently schedules local deliveries in over 150 cities, including Europe and Asia.
Finally, STV enabled our investment in the Sunseap Group. With around 160 megawatts of distributed solar contracts, an electricity retailer license in Singapore and large-scale solar projects, Sunseap's innovative approach has established a private market for cleaner electricity.
Not all of STV's investments will work. But we'll learn a lot along the way. This approach of learning and "pivoting" towards better path, is something we are working hard to instill broadly in our New Energies business.
This brings me to the next element of Shell's approach: to be involved. To understand. And, with a focus on the customer, find the value. This is very much what New Energies is about.
Shell cannot hope to make money in the new energy landscape if it does not understand the market.
That is why we were part of the consortium that bid for, and won, the tender for the Dutch offshore windfarms I mentioned. It is why Shell is part of the H2 Mobility joint venture in Germany, which is dedicated to establishing a nationwide network of hydrogen filling stations.
We also have developments underway in biofuels. Shell is already one of the world's biggest producers of low-carbon biofuels, through its joint venture Raízen.
But our learning on biofuels now extends to advanced biofuel processes too.
For example, Shell, along with our partners at the Gas Technology Institute, is opening a demonstration plant in Bangalore, India, featuring a different type of advanced biofuel process.
It is called IH2 and it turns biomass and waste into fuel that can be put straight into a car, van or truck.
Which brings me on to the final element: collaboration.
Ultimately, without a commitment to collaboration most approaches will fail. That is true about all the investments made in start-ups and young companies. It is true of the joint ventures at the heart of projects such as Raizen biofuels or H2 Mobility in Germany.
For, none of us have the monopoly on innovation, and everybody has plenty to offer others. Robots may disrupt some roles in the future - but the finest ideas will still require the brightest human minds.
This article was first published by Mark Gainsborough on LinkedIn.