Oil firms turn to renewables to power operations

From the newsletter

African oil companies and international oil majors are integrating renewables to power their operations in the growing energy transition. This week, the Egyptian General Petroleum Corporation (EGPC) reported that it had installed a total of 30 MW of solar PV across its branches in the last fiscal year and has 20 more projects in advanced stages of completion.

• The trend is being driven by declining renewable costs, energy security imperatives, and the need to address Africa’s energy poverty while navigating global climate pressures.

• Beyond Egypt, both Libya's National Oil Corporation and Ghana's oil and gas company are taking steps to integrate renewable energy into their operations and the country's energy mix, alongside their traditional oil and gas activities. Other countries include Nigeria and Algeria.

More details

• EGPC’s 38 projects include flare gas utilisation, solar expansions, and upgraded digital platforms for seamless project monitoring and operational integration. The 30 MW of solar capacity alone has contributed to annual fuel savings estimated at around $107 million, allowing for reinvestment into further renewable developments.

• Apart from hedging against volatile markets and future-proofing their operations, oil companies using renewables can replace expensive and polluting diesel generators with cleaner, lower-cost energy sources like solar. This shift not only cuts fuel expenses but also simplifies logistics, especially in remote locations where fuel transport is costly and challenging.

• Oil companies could also benefit from localised power generation, especially from renewables with storage. This can, in turn, provide reliable power at the point of consumption, reducing reliance on centralised grids and potential disruptions.

• Policies are enabling this trend. In Egypt, the adoption of the EU Carbon Border Adjustment Mechanism has heightened incentives for cleaner energy production. This external pressure aligns with domestic policies encouraging renewable deployment, such as enabling private-to-private (P2P) power agreements in 2025, allowing companies to trade renewable energy directly, and spurring investment in on-site generation. Such policies create a supportive environment encouraging oil companies to deeply embed renewable solutions.

• Besides captive power, oil companies are also venturing into utility-scale projects. International oil companies Shell and TotalEnergies are accelerating their renewable ambitions in Africa, with TotalEnergies completing its purchase of SN Power and expanding into 610 MW of hydropower projects across Uganda, Rwanda, and Malawi. It is also building 260 MW of solar and wind projects in South Africa. Shell is advancing solar-plus-storage projects in Nigeria and South Africa.

• Relying on grid electricity, which many African countries have long underinvested in, is becoming increasingly unreliable due to frequent blackouts. By building their own power plants, companies can reduce dependence on the grid and secure an uninterrupted power supply, crucial for energy-intensive sectors such as oil and gas.

• In addition, the financial strength and market dominance of oil majors provide them with steady revenue streams that can be channelled into establishing self-generation facilities. This not only ensures energy security but also positions them to scale up and participate in utility-scale renewable projects, strengthening their role in Africa’s energy transition.

Our take

• African oil companies are poised to transform into integrated energy providers, blending fossil fuel production with substantial renewable energy portfolios. This evolution will allow them to meet rising domestic and regional energy demands while driving sustainable growth and attracting global investment focused on clean energy.

• With more and better policies, oil companies will have stronger incentives and clearer pathways to scale renewable projects. This policy momentum will accelerate the continent’s energy transition and foster greater private sector participation.

• African oil companies could set the pace for national energy transitions. Their scale and capital give them the ability to deploy large volumes of clean power quickly.