Shell Exits Brazilian Wind and Solar Projects Amid Unfavorable Conditions
Shell has terminated its wind and solar projects in Brazil, citing unfavorable investment conditions. The company plans to invest less in renewables and focus on oil and gas, announcing reduced capital expenditures and increased cost-cutting measures.
Shell has officially withdrawn from its planned wind and solar projects in Brazil, attributing the decision to an unfavorable investment landscape. According to a Reuters report, the company has stated, “We are always exploring ways to create value from our power generation portfolio, including exiting activities that do not fit into our strategy or do not generate sufficient returns.” This announcement comes shortly after Shell signaled a renewed focus on oil and gas.
Brazil’s renewable energy projects have faced numerous challenges, including an oversupply of energy from alternative sources, a complicated regulatory environment, and sluggish demand growth. Shell had formally requested Brazil’s energy regulator to rescind its rights to operate several solar power plants in the central and northeastern regions.
During its recent investor day, Shell announced a reduction in its capital expenditure range for 2025 to 2028, planning to invest $20-22 billion annually, down from the previously stated $22-25 billion. The company is also focusing on increasing cost reduction efforts, aiming to elevate cuts from $2-3 billion to between $5-7 billion by year’s end 2028 while enhancing shareholder returns through buybacks and dividends.
Shell is among the first European majors to return to oil and gas following its 2023 strategy, which emphasized continued investment in this sector while selectively allocating resources to renewable energy. This shift signifies a broader trend in which Shell is gradually reducing its involvement in wind and solar power, prompted by underwhelming investment returns in these areas.
In summary, Shell has decided to abandon its wind and solar projects in Brazil due to an unfavorable investment climate and persistent challenges within the renewable sector. The company is redirecting its focus back to oil and gas, announcing significant planned reductions in capital expenditures and enhanced efforts toward cost savings. This strategic pivot reflects a growing trend among major energy companies reassessing their positions in alternative energy markets.
Original Source: oilprice.com
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