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Https://www.reuters.com/business/energy/bp-enters-japans-power-retail-market-2023-11-27/
These investments make absolutely no sense to me. They're incoherent and lack focus.
We need a strong CEO to develop and present a focused, clear and coherent strategy.
All IMHO DYOR
Happy
Interesting. I'd argue they are coherent and this activity is a natural extension of bp's wind activity in-market to date - establishing the energy value chain play in a G7 market in partnership with a local player.
As Shell found in the UK, fronting an energy retailer amid a cost of living crisis exposes you to all of kinds of reputational and political risk for no profit. I know Japan is a different culture but I can't imagine energy retail is very profitable.
All IMHO DYOR
Happy
I think the secret might be in their comments about controlling electrons.
BP believe there will be a shortage of power and they want to be in the right places to own the production as well as look after their customers, vertical integration in a broken supply chain.
They want to apply this across the board and be a key player in the market place.
In the future there will be more of a differential between green and non-green power - ie green bio gas and nat gas once the markets (and records) for these things are worked out. Industry will be able to sell at a premium any item "produced with 100% green energy" (not like the bodge in the UK where my '100% green' energy deal was cheaper than other alternatives).
They will want to be producing as much H2 as possible from the huge excess [and almost free] energy produced when it's windy in the UK in the future.
They believe there will be very large margins in energy due to all the bad investment decisions being made and the huge fracture between renewable and fossil. No one else is going for this position and it could be very profitable.
It should also be clear to everyone that investment mistakes will be made (like with some wind*), but these mistakes are only obvious in hindsight, a good company will take risks to maximise profits.
* even with wind if BP are not subject to restrictions they can make more use of the electrons than Renewable companies - they might be able to drain off the power for their H2 if that provides a better price, or charge more than the price cap applied to others. If they have not taken government subsidies they might be able to charge large premiums for the energy produced in the future. No one knows whether the building of wind farms is profitable or not as the energy future might be very different than today.
I think the word "retail" probably doesn't represent the "retail" sector as you would think in typical commercial language - I'd guess it just means they can now sell power to anyone under Japanese law - which would support their comments re: integrated value chain and green electrons (see planits post)
"Industry will be able to sell at a premium any item "produced with 100% green energy" (not like the bodge in the UK where my '100% green' energy deal was cheaper than other alternatives)."
Why would this be so? There's no such thing as a "green electron". It's consulting gobbledegook. People will pay for the cheapest energy. No-one's gonna care if it's "green". It's a fad.
All IMHO DYOR
Happy
Again, I'd argue the alternate view - many large co's have their own stated ESG goals and are responsible to investors, they need to find ways to decarbonise whichever major power hungry industry they play in. You already see this now with firms moving towards biofuels which command a premium. - https://biofuels-news.com/news/dhl-to-transition-on-site-fuelling-stations-from-diesel-to-hvo-by-the-end-of-the-year/
as for "there is no such things as a green electron" - there is and there's different ways to trade this green electron which create commercial opps.
Wasn’t this just the type of forward looking theme which Mr.Looney kicked us off towards before he was ousted (by the puritanical dinosaurs in the dynamic BoD)?
One thing for sure.
The energy system of the future will be different from now.
Historically it was coal is king.
Then North sea oil.
Then the dash for gas.( for power stations).
Energy markets evolve to what is cheapest.
In some areas green now makes total sense due to location,and lack of natural resources locally.( particularly on islands where diesel generators were used in the past).
No one really knows what the future energy system will look like.
But yes oil will be around for some time yet( and not just a couple of years)