In a significant strategic shift, Shell has declared it will not pursue any new offshore wind projects, marking a notable retreat from renewable energy initiatives under the leadership of Chief Executive Wael Sawan. The oil major confirmed its commitment to maintaining existing wind farms in the Netherlands whilst continuing development of current pipeline projects across Europe, the US and the UK.
The company’s stance, revealed on Wednesday, emphasises its intention to “maximise the value of existing renewable generation platforms.” Shell maintains interest in power purchase agreements where commercial terms prove favourable, alongside potential equity positions given compelling investment cases.
This strategic realignment emerges from an internal business review aimed at cost reduction, strategy simplification, and enhanced returns. The move mirrors similar actions by industry peer BP, which recently listed its US onshore wind portfolio for sale.
The offshore wind sector has faced considerable headwinds, with rising costs and supply chain constraints impacting profitability. Major player Ørsted reduced its 2030 growth targets after abandoning two US offshore wind projects last year, while Equinor has scaled back early-stage developments in certain markets.
Shell’s renewable energy portfolio currently encompasses 3.4GW of capacity globally, sufficient to power 16 million UK homes annually. The company operates or is constructing 2GW of offshore wind capacity, with an additional 7.9GW in development. As part of its restructuring, Shell Energy will be divided into separate generation and trading units to streamline operations.
The announcement reflects broader industry challenges, particularly as rising interest rates impact the viability of projects requiring substantial upfront investment. Industry expert Jérôme Guillet notes a growing selectivity among utilities regarding offshore wind investments, with early-stage development facing particular difficulties.
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