07
2022
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01
"Cross-border competition" by energy companies has become the new normal.
Author:
Under the background of accelerating energy transformation, "cross-border competition" has become the new normal. The businesses of oil companies and traditional utilities are increasingly overlapping and overlapping, and head-to-head competition seems inevitable.
In recent years, I have repeatedly heard a voice in the industry that many investors have begun to treat oil and gas companies as public utilities.
It is reasonable to say that compared with many public utilities (electricity, gas, water supply, etc.) with natural natural monopoly properties, the degree of marketization and commercialization of oil and natural gas is generally higher. Moreover, the business interface of these two types of companies has been generally clear for many years, and basically each of them "does not violate the river" (except that there may be some product supply relationships in the upstream and downstream of the industrial chain, such as the natural gas of oil companies may become the power generation of utility companies. Raw materials), so theoretically it is difficult to compare these two types of companies together.
If we have to talk about the similarities between oil companies and utility companies, I think the first thing is that both companies are in the category of large energy services (water supply, power supply, oil supply, gas supply, heating and even future hydrogen supply are all "big energy" supplies).
The second possibility is that the dividend returns of oil companies are relatively stable, comparable to the dividend performance of utility companies over time. Because many utility companies are regulated by the government, they have always had a relatively fixed return on investment (around 6-10% in most countries) and relatively stable dividend returns. And multinational oil companies have always attached great importance to shareholder returns.
Judging from the performance of recent years, the dividend returns of the super oil giants are even better than those of some well-known utilities. For example, the 2017 annual report of Eon Group shows that the company's dividend per share in 2016 fell by as much as 80% compared with 2012. Rhine Group only paid 5 million euros symbolically in 2015 and 2016, down nearly 100 from 0.615 billion euros in 2013 and 2014. Its dividend performance has been much inferior to that of oil giants.
However, in the context of accelerating the energy transition, "cross-border competition" seems to have become the new normal. In particular, "re-electrification" is increasingly regarded as the core of the future energy transition, and the transition to electricity has become the consensus of many oil companies, and this field has been regarded as the "site" of traditional power utility giants for a long time ".
Under the general trend of transition to electricity, the businesses of oil companies and traditional utility companies are increasingly overlapping and overlapping, and positive competition seems inevitable.
Oil companies and utility companies in many areas of "short-term combat"?
Involved in upstream electricity production and sales. Historically, oil giants such as Total and Eni have had their own traditional power installations on a scale. According to the annual reports of the two companies, Total has 1.6 gigawatts of gas-fired power plants in Abu Dhabi and Eni has an installed capacity of 4.7 gigawatts. Total's electricity sales in Europe reached 70.2 billion kilowatt-hours in 2017, Eni's total power generation reached 24.27 billion kilowatt-hours in 2017, and 35.3 billion kilowatt-hours in Italy and other regions. In recent years, BP, Shell, Equinor, Total and other companies have gradually increased investment in wind power, photovoltaic power generation and other fields.
Traditional utility companies have also actively entered renewable power businesses such as wind energy and photovoltaic in recent years. More than 30% of the power structure of Italy's National Power Company and Berkshire Hathaway Energy Company comes from new energy power (non-hydropower). France's Gas Suez Group proposes to have 5 GW of wind power and photovoltaic installed capacity by 2022. According to the author's preliminary statistics, there is still an order of magnitude gap between the new energy power installed capacity of multinational oil giants and some established power utility companies, but it is not ruled out that some ambitious oil companies may further increase investment in the future.
Expand energy storage business. In recent years, major international oil companies have actively developed lithium batteries, solid-state batteries, fuel cells and high-voltage charging technologies through acquisitions, venture capital, and cooperation with universities. Total bought saft, a battery manufacturing company. BP cooperated with Tesla to build an energy storage system for wind power plants in the United States and made venture capital investments in some mobile travel technology companies to promote the development of "ultra-fast charging" technology. Shell Venture Capital Company injected 60 million euros into sonnen, a German energy storage solution provider, in May 2018 and recently completed its 100 per cent acquisition of the company.
In recent years, many utility companies have also paid great attention to the energy storage business and have made a series of investments. According to GTMResearch statistics, North American and European utility groups invested in energy storage between 2010 and 2016, accounting for 14% and 13% of their distributed energy investments, respectively. For example, Innage, a company of Rhine Group, invested tens of millions of euros in August 2016 to acquire German solar energy and energy storage company Belectric,EnelGreenPower Company acquired US electricity demand response service provider EnerNOC, and French EDF Company announced that it would invest US $10 billion in energy storage systems by 2035. The overall feeling is that these two types of companies are basically on the same starting line in the field of energy storage.
Participate in power terminal energy services. Multinational oil giants have accelerated their deployment in terminal areas such as mobile travel in recent years. Shell hopes that by 2025, 20% of global gas station sales will come from rechargeable electric vehicles and low-carbon fuels. Shell acquired NewMotion, the charging network operator, which operates more than 30000 charging stations in 25 European countries. The company has also reached a cooperation agreement with Ionity to build 80 charging stations on European highways by 2019. BP announced the acquisition of Chargemaster in 2018. The company is the largest supplier and operator of charging piles in the UK, with 6500 public and 30000 household charging piles. At the same time, BP also invested $5 million in FreeWire, a supplier of mobile charging systems for electric vehicles, and $20 million in StoreDot for battery technology companies.
However, traditional public utility companies are also "ambitious" for future transportation services. Some companies have set targets for large-scale construction of charging facilities. For example, Germany's E. on Group plans to build 10000 charging piles in Europe around 2020, ENEL (Italy's National Electric Power Company) plans to build 7000 new charging stations by 2020 and 14000 charging stations by 2022. With the gradual popularization of transportation electrification, it is expected that the competition between these two types of companies in the field of transportation will become more intense.
Multinational oil giants are beginning to acquire utility companies. The classic case is Shell's acquisition of the UK's First Utility Company (FirstUtility). Although FirstUtility is only a small utility in the UK, serving only 825000 families. However, from the perspective of the UK terminal market, these small utilities have grown rapidly from less than 1% of the UK market 10 years ago to 20% of the current market (of which FirstUtility has a 3% share). Shell's merger is expected to become a "catfish" that stirs the UK retail energy market, impacting the original market supply pattern.
Under the general trend of energy transformation, it can be seen that the industrial boundaries between oil companies and traditional power, gas and other public utility companies are becoming increasingly blurred. The two types of companies are likely to break the old model in the future, in the fields of renewable power production, energy storage, mobile travel and terminal energy services, and compete and compete in some fields. Of course, cooperation in competition may also be a trend.
The two types of companies can give full play to their respective advantages and form cooperation and alliance relationships in some new business areas. For example, in the construction of the world's largest offshore wind power project in Dogger Sandbar, Statoil has formed a consortium with three utility companies, including Rhine Group, South Scotland Power Company and Norwegian State Power Company, each accounting for 25% of the shares. Other gas and electric utilities have joined forces with oil companies to advance access to upstream LNG resources.
Is the transition to an integrated energy service provider a common trend?
Judging from the challenges faced by these two types of companies, the current replacement of traditional fossil energy by renewable energy mainly occurs in the field of electricity. Therefore, the impact of low-carbon energy transition on power utility companies is much greater than that of oil companies (especially in Europe). This also leads to a firmer determination of these utility companies to transform into "integrated energy service providers" that provide integrated energy solutions, the exploration is also deeper.
It can be seen that with the decline in profit margins in the traditional production and sales of electricity, many utility companies have begun to shift from a single electricity provider to an integrated energy service provider.
For example, the Italian national power company started a new round of strategic transformation in 2016, taking digital strategy and customer focus strategy as the two engines leading the future development, and established five strategic pillars including improving operational efficiency, industrial development, organizational streamlining and active and flexible asset management, open innovation ecology, human resources and social responsibility, it is committed to becoming an energy company with renewable energy, distribution of electricity and integrated energy services as its main development direction.
Faced with the rapid development of new energy business in Germany in recent years, the country's power utility companies have been forced to accelerate their business transformation. After the asset restructuring of the Italian Group and the Rhine Group in March 2018 (according to the content of the agreement, the Italian Group will acquire the 76.8 per cent equity of the Rhine Group and the Rhine Group will acquire the 16.67 per cent equity of the Italian Group after the acquisition of the Italian Group), the Italian Group will focus on the power grid business and provide energy solutions for downstream customers, with a 60% share of the distribution network in Germany, greater focus on distribution networks, smart grids, electric vehicle charging, energy supply, energy efficiency services and smart home solutions.
In recent years, Rhine Group has also been actively assisting families or communities to set up their own decentralized power generation equipment and energy storage integration systems. The energy self-sufficiency rate of many communities can reach 80% to 90%. The deficiencies are only supplied by Rhine Group's power grid, but the cost is not calculated by electricity (otherwise, the revenue will only be 10% to 20%), but by comprehensive service cost.
France Gas Suez Group is also committed to becoming a global provider of energy services and supply solutions. Its integrated energy services business covers gas supply, heating, power supply and other product services, energy engineering design, installation and big data support services. For example, the company has signed a 50-year contract with Ohio State University in the United States to invest 0.811 billion million euros to build an integrated energy production system covering green energy production, storage and electric vehicles. It is expected to provide energy services to 100000 users in the region, increasing the energy efficiency of buildings by 30% and reducing energy costs by more than 20%.
Judging from the direction of M & A investment by public utility groups in North America and Europe, in recent years, they have gradually increased their investment in companies providing energy management solutions and distributed energy system integration companies. According to GTMResearch statistics, from 2010 to 2016, public utility groups in Europe and North America invested a total of 130 companies in the field of distributed energy, with a total investment of more than US $2.9 billion. Companies that directly provide energy management solutions to consumers received more group investment (27% and 38% respectively). These mergers and acquisitions will undoubtedly further accelerate the transformation of traditional utility companies into integrated energy service solutions providers.
Although in recent years, some international oil companies have proposed to transform to the "big energy" strategy, at present, many oil companies' main business income still comes from traditional oil and gas business. the understanding of the concept of "integrated energy service provider" is more focused on providing diversified integrated energy products, which is far from establishing a set of mature business model.
With the help of digital technology, some oil companies have actively explored the provision of terminal services such as refueling, refueling, charging, commodity retail, auto finance, etc., but the above exploration seems to be more concentrated in the field of travel. In terms of providing comprehensive energy solutions for customers (enterprises, communities, etc.), no particularly mature samples have been seen yet.
Perhaps with the gradual deepening of the energy transformation in the future, and with the gradual increase of oil companies' investment in the whole industry chain of new energy business, there will also be "integrated energy service providers" in the camp of oil companies, but it will take a longer time to observe.
Energy,Electrical
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