Industrial, Solar, Sourcing Renewables, Wind - November 29, 2018
ExxonMobil signs for 500MW of wind, solar
ExxonMobil Corp. has signed two 12-year agreements to purchase 500 megawatts of wind and solar power from Orsted A/S. The power will be used by Exxon in the Permian Basin, located in west Texas and southeast New Mexico, which is the fastest growing oil field in the U.S.
According to a report by Bloomberg NEF, this is the largest ever renewable power contract signed by an oil company. “It will be interesting to see how the other oil majors respond,” Kyle Harrison, a BNEF analyst, said. “A purchase like this has historically been unprecedented.”
A total of 250 MW of wind power will be sourced from Orsted’s Sage Draw wind farm, scheduled to be finished in 2020, while the remaining 250 MW will come from the Permian Solar farm, scheduled to be finished in 2021.
While booming oil production in the Permian Basin is helping Exxon offset declining output elsewhere in the world, the report said, the Basin's output has grown so fast that infrastructure including pipelines and power plants have struggled to keep up. One area of the Basin has tripled its load since 2015 and is likely to triple again by 2022.
The BNEF report noted that Exxon was sued by investors for allegedly downplaying the risks of global warming, but was now drawn to clean energy because prices are low enough to compete with fossil fuels. “We frequently evaluate opportunities to diversify our power supply and ensure competitive costs,” Julie King, a spokeswoman for Exxon, said in an email to BNEF. The company denies misleading investors about climate change.
SED's View: ExxonMobil's purchase represents a milestone as big oil makes a major renewable energy purchase because of economics. That's something to take note of and great to see.