Shell Takes $1B Charge as it “Pauses Involvement” in U.S. Offshore Wind
Oil major Shell is continuing to reduce its involvement in renewable energy and offshore wind including effectively ending its involvement with the U.S. offshore wind energy sector. Buried within today’s year-end 2024 financial report is a note that results include impairment charges of more than $1 billion “mainly relating to renewable generation assets in North America.”
The company has been moving away from its previous push into renewables as part of a strategy that CEO Wael Sawan described as “simplification” which is helping to deliver over $3 billion in cost cuts since 2022. Commented on renewable energy the company said it was “high grading its portfolio.”
The bulk of the $1.085 billion impairment charge is being taken in the fourth quarter ($996 million) and relates to the company’s decision to “pause” its involvement in a joint venture to develop New Jersey’s Atlantic Shores offshore wind project. Shell New Energies US and EDF-RE Offshore Development (a subsidiary of EDF Renewables) won U.S. federal approval in October 2024 for the construction plan for a two-stage project that would provide 2.8 MW of energy to New Jersey with up to nearly 200 turbines. The project was bid into New Jersey’s fourth round of wind solicitations.
“We just don’t see that it fits both our capabilities nor the returns that we would like,” Shell’s Chief Financial Officer Sinead Gorman said in a call with reporters reports Bloomberg. “So we took the decision to effectively write that off and pause our involvement.”
When the construction plan was approved it was highlighted the project would be the first offshore wind project in New Jersey. The lease dates to 2015 when it was awarded to US Wind and later transferred in 2018 to EDF and later into the joint venture with Shell. The project, which would be about 9 miles off the New Jersey shores near Atlantic City and Sea Girt, faced strong local opposition and was used by Donald Trump to highlight his disapproval of offshore wind.
While opponents of the project hoped today's announcement would mark the end of the effort, Atlantic Shores issued a statement saying it intends to continue progressing New Jersey’s first offshore wind project and its portfolio in compliance with its obligations to local, state and federal partners under existing leases and relevant permits. Trump wrote online last week he hoped the project would be “dead and gone.” EDF did not comment, but Atlantic Shores wrote in its statement, "Business plans, projects, portfolio projections and scopes evolve over time – and as expected for large, capital-intensive infrastructure projects like ours, our shareholders have always prepared long-term strategies that contemplate multiple scenarios that enable Atlantic Shores to reach its full potential."
Shell in March 2024 also announced it had sold its 50 percent position in SouthCoast Wind Energy to joint venture partner Ocean Winds North America as part of the realignment of its renewables portfolio. Shell had entered into the joint venture in 2018 for the project which was then known as Mayflower Wind. Ocean Winds has continued to pursue the project and BOEM recently approved the construction plan. It calls for an approximate capacity of 2.4 GW in a lease area about 30 miles south of Martha’s Vineyard and 23 miles south of Nantucket, Massachusetts. The project however has faced delays as it is still negotiating its power purchase agreements with Rhode Island and Massachusetts.
Shell's continued move away from renewable energy came as the company reported a 16 percent decline in profits for 2024. While raising its dividend, the company said operations were performing well but cited lower margins for LNG, lower oil and gas prices, lower demand, and weaker margins for its refinery operations. Earnings were $23.72 billion down from $28.25 billion in 2023 and the $1 billion impairment in renewables was part of a larger net impairment charge of $2.2 billion expected in the fourth quarter.