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Shell: Sees Potential Returns Of 8-12% For Integrated Power Business

Targets 5 Million Retail Customers By 2025

Affirms USA As Core Market

Touts Shell Brand, Millions Of Customer Interactions

June 4, 2019

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Copyright 2010-19
Reporting by Paul Ring •

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During an investor day, Shell reiterated its plan to significantly grow its electricity business

"[W]e believe we can build a modern integrated power business that delivers returns of 8-12% when on stream," said Maarten Wetselaar, Integrated Gas & New Energies Director for Shell

"We see potential for profitable involvement across almost the entire integrated power system, from supplying power and related services directly to customers, to buying, selling, trading and optimising it, to lower carbon generation," Wetselaar said

"Our core markets of interest are in Northwest Europe, the USA, and Australia, where customers want lower-carbon alternatives, where governments are taking action to promote decarbonisation of power, and where people are willing to pay a fair price for cleaner power," Wetselaar said

Wetselaar said that, "we have the strongest brand amongst all energy companies and have an edge when it comes to marketing and customer intimacy."

Shell said that it would "leverage" its strong brand, and reported "positive response" from customers following rebranding of its U.K. retail supplier First Utility to Shell Energy in April 2019

"Shell serves hundreds of millions of unique customers per year, many of whom will be turning to power to decarbonise their energy usage," Wetselaar said

"With this, we can provide integrated offerings to our customers, for example in the US we supply General Motors with fuels and lubricants and now we are one of their major power suppliers," Wetselaar said

Wetselaar said that Shell has assembled the building blocks for this integrated power business

"Over the past few years, we have started assembling the building blocks. Let me highlight some of these. On the customer side, we have existing business and customer relations with all four customer segments, and recently acquired retailers like MP2 in the USA and First Utility in the UK, which we rebranded to Shell Energy. And you may have noticed we have teamed up with PGGM to explore the joint acquisition of Eneco, a Dutch sustainable energy provider that would give us access to more customers and a modern generation portfolio. We also have invested in sonnen, a leader in smart battery storage systems. We joined IONITY, which provides charging along major European highways and acquired New Motion and Greenlots giving us scalable positions in EV charging in Europe and in the USA. Now we are looking to bring these together, for example by offering our Shell Energy customers energy solutions to charge their electric vehicle along major highways or at various charging points, in addition to providing them with 100% renewable electricity. On generation, we have a position with onshore wind and are expanding offshore through Borselle in the Netherlands and with acreage we secured in the USA. And in solar, we have acquired an interest in Silicon Ranch in the USA and Cleantech Solar in Asia which has increased our solar generation capabilities," Wetselaar said

"So, as you can see, we have been growing this business over the past few years, but from different starting points," Wetselaar said

"In retail, we added some 750,000 customers and could add more," Wetselaar said

In an investor presentation, Shell listed "aspirations" for the power business of 5 million retail customers and 250 TWh by 2025, subject to demonstrating 8-12% returns

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