SAN FRANCISCO ― Ryan Hanley built his career at some of the world’s biggest clean energy startups. The civil engineer became fascinated with the potential for small-scale, clean energy devices on the electrical grid, which led him from utility Pacific Gas & Electric to SolarCity, the largest rooftop solar company in the U.S. at the time.
There, he focused on creating a crowdsourced power plant that could deliver clean energy to the grid at scale by combining the power of solar systems and other devices in individual homes. Hanley stayed on when electric car company Tesla acquired SolarCity in 2016. Tesla later built the biggest grid battery in the world in southern Australia; it was Hanley who figured out the business model for that unprecedented project.
It may be surprising, then, that Hanley now works for one of the world’s largest oil companies, Royal Dutch Shell. When the job offer came, he asked himself if he could continue the clean energy mission there.
“I had to do my best to assess Shell from the outside,” he said. “There were enough data points that I walked away and said, ‘I think it’s authentic and I think it’s credible.’”
Shell tapped Hanley to build a virtual platform to unite its clean energy assets. Based in The Hague, Netherlands, a coastal city that sits just a few meters above sea level, Shell has taken considerably more interest in clean energy than many of its peers, and has allocated up to $2 billion annually to this effort through 2020. The strategy, as described in a June shareholder presentation, is to “prove investment case” in the first few years; if the clean energy business hits financial milestones, Shell will scale up investment and business activities considerably by 2025.
Since 2016, Shell has absorbed electric vehicle charging companies, retail electricity providers, and solar battery vendors across Europe and the United States. It has begun work on massive offshore wind farms and solar power plants, and plans to roughly quintuple its installed renewable capacity by 2025.
Hanley’s job, as a general manager in Shell’s New Energies division, is to transform this global array of clean energy assets into a cohesive, economically beneficial whole.
“I’m at a big oil and gas company because the problem requires scaled resources and scaled ambitions,” Hanley said. “The potential for impact that I feel in my small contribution at Shell is an order of magnitude higher than I’ve felt so far in my career.”
The limits of startups
Hanley’s view clashes with a sentiment common among activists: that oil companies won’t solve the climate crisis and should be punished for their role in supplying planet-warming fuels. But for him, the role seemed like the opportunity of a lifetime to convert the world to clean energy.
Over the last decade, Silicon Valley startups made electric cars sexy, put solar panels on hundreds of thousands of roofs, and built batteries to store solar-powered electricity.
These startups have had an incredible impact on the power sector, Hanley noted, but even the best-funded companies face a structural challenge. They have to pick a specific problem to obsess over and tackle better than incumbents. The jump between doing one thing really well and eliminating fossil fuels from the entire global energy system is basically impossible.
“At some point, you need the ability to go after the entire value chain to make a real difference,” Hanley said. “Startups are always going to be challenged to get there on their own.”
The opportunity to tap Shell’s global network and build a clean power business within it eventually overcame Hanley’s initial doubts and the raised eyebrows of his former colleagues.
He’s not the only clean energy expat finding a home at Shell. Take German startup Sonnen, which makes battery devices for homeowners to store solar power, and which Shell acquired in February. On its website, Sonnen’s co-founder and CEO Cristoph Ostermann outlines the company’s mission: To provide clean, decentralized energy in order to “emancipate our world from the dependence on fossil fuels and anonymous energy corporations.”
Ostermann said joining a massive fossil fuel company was a logical progression. After nine years of iterating his product — the ”sonnenBatterie” or solar battery — it was time to push sales and production into high gear. A global company like Shell does that better than a 600-person Bavarian startup.
“For us the question is relatively simple: Do we believe that we can achieve more or less being part of the Shell Group?” Ostermann said. “We believe we can achieve more.”
Can you trust an oil company?
This newfound excitement does not erase the fact that Shell has spent three decades turning immense profits on oil and gas, despite knowing the dangers of planet-warming emissions.
Long before it created New Energies, company scientists had warned Shell about its role in man-made climate change, as InsideClimate News and others have reported.
Many say the company should be punished for that long history, rather than lauded for finally mending its ways.
Democratic presidential contender Sen. Bernie Sanders (I-Vt.) would partially fund his $16.3 trillion Green New Deal climate plan with settlements from — and taxes aimed at — oil and gas companies. “We cannot accomplish any of these goals without taking on the fossil fuel billionaires whose greed lies at the very heart of the climate crisis,” he wrote in the plan.
Marchers at the September 20 climate strike in Los Angeles framed their position more lyrically: “ExxonMobil, BP, Shell; take your filth and go to hell.”
To begin to earn climate activists’ trust, Shell must first acknowledge the magnitude of the climate crisis and its role in it, said scientist and climate activist Peter Kalmus.
Kalmus planned to address that topic when Shell invited him to speak at its “Powering Progress Together” conference in San Francisco in June, which focused on how to make a net-zero emissions world possible. But his talk never happened, because Shell disinvited him after seeing the slides he planned to present. Kalmus said he was told that the presentation spent too much time “looking at the past.” A Shell spokesperson declined to comment on this.
A challenge to meaningful clean energy progress, Kalmus noted, is that shareholder expectations and corporate governance constrain how quickly a corporation can overhaul its core business.
“If you’re a CEO, you’re not allowed to commit corporate suicide,” Kalmus said. “But you can still do much more than what is being done.”
‘Not stoppable any more’
Exactly what Shell is doing can be hard to pin down, because the company does not release itemized breakdowns of its billion-dollar clean energy spending. And $2 billion is but a sliver of Shell’s annual capital investment budget of $25 to $30 billion.
Plus, fossil fuel companies have announced big investments in clean energy before, only to walk away from them. Chevron acquired a renewables development company in 2000, but sold it off in 2014. BP invested billions of dollars in renewables through the 1990s and 2000s. It also ran a major solar panel manufacturing business, which shuttered in 2011, due to fierce competition from factories in Asia and fallout from the 2010 oil spill in the Gulf of Mexico. (BP then reentered the solar industry in 2017 with a $200 million investment in a major project developer.)
But the renewable market has evolved substantially in the past decade, making the current business proposition much more enticing. Large wind and solar plants are producing electricity at cheaper and cheaper prices, beating out competition from fossil fuels in major markets across the U.S. and the world.
“Renewable energy is simply not stoppable any more because it is price competitive,” Ostermann said. “This is a trend that is irreversible.”
The power sector offers oil and gas companies an attractive growth market, Ostermann added. While they have long supplied fuels to power plants, they have not generated and sold power to customers. Wind and solar investments put Shell into competition with electric utilities and retailers.
Shell still produces natural gas, one of the power-plant fuels that wind and solar compete with. (The biggest near-term loser from cheap renewables is coal.) Staying out of clean power production, on the other hand, would not stop renewables’ growth as a power source; it would just let others profit from them.
Several competitors have chosen that strategy. Exxon has almost no clean energy business to speak of. Chevron made a few venture investments with a $100 million Future Energy Fund launch last year, a far cry from building out a real clean energy business.
“I don’t think any of the other oil companies get anywhere close to what Shell is doing,” said Brett Hauser, CEO of Greenlots, the electric vehicle charging network company that Shell acquired in January. Now Hauser will work with commercial fleets that Shell supplies fuels to, and offer a phased transition from fossil fuels to electrified transport.
Shell’s interest in electric cars and renewable power shows that these technologies have finally become mainstream, Ostermann argued. “Everybody who’s helping reduce the CO2 footprint and commoditize technologies like ours, I think is good,” he said. “We can’t afford the luxury to finger point.”
That pragmatic strain informs other Shell affiliates, like Axiom Exergy co-founder and CEO Amrit Robbins, who took Series A investment from Shell. His startup cuts the energy consumption of grocery store refrigeration.
At first, the idea of working with an oil company sounded “a little bit crazy,” he acknowledged. But oil extraction generates cash, which clean energy startups need right now.
“I can’t think of a better way to spend oil money,” Robbins said.