Shell has agreed to sell its European onshore renewables business to TotalEnergies, as the oil giant continues to scale back its investments in green energy.
The FTSE 100 firm said the deal, expected to complete by the end of 2026, will include the sale of assets across the UK, Italy, the Netherlands and Spain. The sale contains a portfolio of around 0.5 gigawatts of renewable energy capacity, as well as a pipeline of future projects.
The sale marks a further departure from Shell's previous strategy of diversifying into green electricity. Under chief executive Wael Sawan, the company has pivoted away from low-carbon investments in favour of its higher-returning fossil fuels business.
Last week, Shell reported it had more than doubled its earnings in the second quarter of the year, after cashing in on what it called 'severe disruption' in energy markets. The boost in earnings in the three months to the end of June came after the Iran war pushed up oil and gas prices.
Shell's high-grading strategy
Machteld de Haan, President of Downstream, Renewables and Energy Solutions at Shell, said the agreement reflects Shell's continued focus on actively managing and high-grading its power portfolio in line with the strategy set out at Capital Markets Day 2025.
Sawan told investors last year that Shell planned to prioritise money-making assets for its trading team, rather than the lower returns offered by wind and solar farms.
De Haan said Shell is recycling capital and prioritising areas where it has differentiated capabilities and can create the most value over time, including through asset-backed power trading and customer-focused energy solutions.
Part of a wider retreat from renewables
The divestment follows the sale of Shell's India-based renewable unit, Spring Energy, in June, after the company bought the firm in 2022 for $1.55 billion. Shell also abandoned plans to develop offshore wind farms in Scotland last year.
Sawan has been on a cost-cutting drive to boost shareholder returns since he took over as chief executive in January 2023, meaning previous plans to cut emissions have taken a backseat.
BP follows a similar path
Rival BP is also doubling down on its pivot to fossil fuels as oil and gas prices rise under new chief executive Meg O'Neill, who joined in April. BP has reorganised its business into two segments, upstream and downstream, and last week announced it had put its North Sea business up for sale in a bid to slim down its operations.
Shares in Shell fell by 0.72 per cent to 3,359p, having gained 21.7 per cent year-to-date.
