Do you, Mr. Jones? ~Bob Dylan, Ballad of a Thin Man
I’m not even a baby boomer, but Bob Dylan’s lyrics can strike with precision and be a metaphor even in 2019. The song “Ballad of a Thin Man” paints a picture of how 1960s middle America couldn’t understand the emergence of non-traditional values from a younger generation. Eventually, Pres. Nixon did, labeled them bums and divided American...but that’s a story for another day.
In 2019, many folks in the media and renewable industry are trying to decipher recent acquisitions made by Shell New Energies, British Petroleum (BP) and other fossil-fuel based companies exploring cleantech technology. Is it a new round of greenwashing (Exxon guilty) by fossil-fuel based companies? Or, are they sincerely trying to find business integration points and a profit model for ten years from now?
Shell New Energies U.S. acquired Greenlots, an electric car charging software and hardware company and Sonnen in 2019. Sonnen is a German-based residential energy storage company and has been highly successful in its home county, and Shell also purchased Texas-based MP2 in 2018. More on MP2 later. All these acquisitions may provide a preview of how Tesla and Shell could turn electric vehicle charging stations into revenue producing assets with some new energy rules.
“Well, I think we have to start with just figuring out where Green Lots and Sonnen fit within Shell. Remember that Shell is a very, very large corporation,” said Jigar Shah, co-founder and pres. at Generate Capital on February 2019 episode of the Energy Gang podcast. “So this strategy is not actually one that moves the needle, and my own sense is this is really a continuation with the acquisition of MP2 in Texas.”
MP2 is an energy retailer and sophisticated trader that uses its physical assets to help drive its trading positions with Electric Reliability Council of Texas (ERCOT). MP2’s physical assets include diesel generators that can produce electricity -- not so environmentally friendly -- but allows the company to produce electricity in a pinch to regulate prices and protect their trades.
Shah believes the acquisitions of Sonnen and Greenlots are just extensions of this energy trading business. In Germany, Sonnen has been a big player in the energy storage market and the country’s rules allow residents to use electricity from their solar installations to receive 0.30 per kWh from the Utility, instead of 0.14 kWH to push that electricity back to the grid.
This begs the question of whether Shell will apply Sonnen’s energy storage technology in the U.S. and try to lobby for different energy rules in the residential space? The commercial space already has demand charges, but what happens if Tesla and Shell also push for advanced demand charging rules to their benefit. Do both companies want new rules to receive revenue for pushing energy back to the grid?
For Tesla, the automaker already has superchargers in place across the U.S. and Musk has always hinted about energy storage and superchargers. Plus, the Tesla Semi is being introduced in the next couple of years and those battery packs will need large amounts of electricity for rapid charging, according to Tesla.
The concept of being able to offload energy back to Utilities is an interesting concept to throw around, and maybe Shell New Energies is leaning this way, too? A similar analogy could be made how Tesla’s no-emissions cars are now reaping rewards from Fiat Chrysler in Europe. Built it now and move the market to your benefit.
Changes would have to come to the U.S., but many energy experts believe advanced demand response rules will appear in the coming years as the electrification economy matures and more players come to the table.
Maybe something is happening, Mr. Jones.