Royal Dutch Shell is accelerating its move into alternative energy, with plans to spend up to $1 billion per year on its New Energies division by 2020, CEO Ben van Beurden said at conference in Istanbul on Monday.

“In some parts of the world, we are beginning to see battery electric cars starting to gain consumer acceptance,” van Beurden said in a speech to the World Petroleum Congress, Bloomberg reported. He added that solar and wind costs are declining rapidly and those technologies are seeing greater adoption as a result.

“All of this is good news for the world and must accelerate,” he said. 

Shell established the New Energies division in May 2016 to manage its investments in renewables and other low-carbon technologies. The alternative energy arm brought together Shell's existing hydrogen, biofuels and electrical activities, and launched the company into wind power, The Guardian reported

At the time, however, New Energies had an annual investment budget of just $200 million per year, totaling less than 1 percent of the amount being put into oil and gas.

The budget increase comes as success in the clean energy sector is raising questions about the long-term business model for fossil fuel majors. According to a recent report from Wood Mackenzie, renewables will be the fastest-growing primary energy source worldwide over the next 20 years, with average annual growth rates of 6 percent for wind and 11 percent for solar. Demand for oil, meanwhile, is forecast to grow just 0.5 percent per year.

British think tank Chatham House published a research paper last year that concluded oil majors must completely restructure their business model or face a “nasty, brutish and short” end within 10 years, due largely to low crude prices and tightening carbon regulations.

In addition to renewables, Shell is exploring new opportunities in hydrogen fuel cells, liquefied natural gas and next-generation biofuels for air travel, shipping and heavy freight. The intermittent nature of solar and wind mean that natural-gas-fired power plants will also have a long-term role in the energy mix, van Beurden said. So fossil fuels are not going away, in his view, but the overall trend is toward decarbonization. 

Van Beurden's comments come on the heels of Shell Energy North America (SENA) announcing that it has signed a purchase agreement for the acquisition of Texas-based MP2 Energy. The bid is another sign of Shell’s growing interest in the power and renewables sector. MP2 holds a diverse portfolio of assets and services, including 30 megawatts of large-scale solar, 40 megawatts of distributed solar and 550 megawatts of wind. The company also has a roughly 550-megawatt demand response portfolio, which makes MP2 a leading demand-response provider in ERCOT territory.

"As Shell continues to expand its energy focus, we will strive to bring customers ever more innovative commodity solutions, including the deployment of new energy management tools," said Glenn Wright, vice president of SENA, in a statement.

Shell, and several other oil majors, have made significant investments in wind, solar and biofuels over the past few decades. In 2009, however, Shell announced it would no longer make large-scale investments in non-biofuel renewables, citing their inability to compete with other resources on cost. At the time, the company said it would concentrate on developing cleaner ways of using fossil fuels, including carbon capture and sequestration. BP, ExxonMobil and Chevron also retrenched from the clean energy space several years ago. 

But market dynamics have changed. In less than a decade, wind energy prices have dropped by 66 percent, and solar power prices have dropped by 85 percent, according to Lazard

In 2016, Shell established New Energies. The same year, Shell Technology Ventures co-led a $14 million investment in Sense Labs, and led a funding round in Geli worth $7 million. Van Beurden picked his words carefully as Shell re-entered the alternative energy arena, reassuring investors that the company would not invest too heavily in solar or other clean energy technologies until they're proven profitable.

“We want to be part of shaping the the face of growing environmental challenges,” he said at a London shareholder meeting in May of last year. “We believe our current strategy provides much greater scope to play a wider role in that energy transition [to a lower-carbon future].”

But, he added, “It's not going to happen overnight."

Since making that statement, Shell has built up an internal team to focus on solar development, led by two familiar former solar faces: Marc Van Gerven, formerly of Q-Cells and First Solar, and Boris Schubert, another Q-Cells alum who also worked at ET Capital. While it's still early days for the team, Shell's new solar arm is reportedly interested in developing international and corporate solar projects.