Shell has taken a 49 percent stake in the Australian utility-scale solar developer Esco Pacific as the oil giant continues building out its renewables portfolio in a number of key global markets.

Melbourne-based Esco Pacific says it has developed 500 megawatts of Australian solar, with 350 megawatts under long-term management — and a 1-gigawatt development pipeline. Shell plans to help Esco Pacific expand its pipeline “both organically and by acquisition.” 

Shell has been planning its own 120-megawatt project in Queensland to reduce the emissions from one of its natural gas operations. It also has planning permission for the 250-megawatt Delga solar project in the same state.

Shell has been building up its energy trading business in Australia, last month acquiring ERM Power, a commercial and industrial electricity retailer, for AUD $617 million (USD $425 million). 

Australia has also been an important market for Shell’s sonnen energy storage business, which has a manufacturing facility in South Australia.

The deal will allow Shell to "supply more and cleaner energy to utility, commercial and industrial customers in Australia," said country chair Zoe Yujnovich in a statement. “As the energy mix shifts in the years ahead, Shell intends to grow with the creation of a material integrated power business.”

Esco Pacific was enjoying rapid growth prior to the acquisition, according to Steve Rademaker, the developer's founder and managing director. “We’d like to build on that growth and continue our rapid scaling by leveraging the resources that the Shell investment makes available to us."

Rapidly growing power-gen arm

The deal fits snugly with Shell’s broader plan for the power sector. Last month Mark Gainsborough, EVP of Shell New Energies, told GTM how the company picks and chooses its investments given that even Shell cannot be present in every market.

“We will continue to be selective and make sure we pick the best projects to work on, the ones that have scale, and have a good fit with our long-term ambitions, which is to be an integrated player in the power value chain where we are able to match up renewable generation with our trading activities and with customer load.”

Gainsborough pointed to Australia, Brazil and Japan as territories where the company is well placed to do so, having recently launched Shell Energy Brazil and Shell Energy Japan. 

It is the U.S., however, where Shell’s power-trading arm is the most advanced, supplying 10 gigawatts — largely power it has acquired through power-purchase agreements. But Gainsborough said Shell will grow its own in-house generation portfolio substantially in the years ahead.

In October, Shell and partner EDP Renewables won a contract  to supply 804 megawatts of offshore wind power to Massachusetts through their Mayflower Wind joint venture.

Shell is not the only European oil major looking to capitalize on renewables in Australia, with Eni, Total Eren and Enel all developing projects in the country.