Back in 2019, Shell caused a buzz when it set out its stall to become “the world’s largest power company” by the early 2030s, in comments variously attributed to CEO Ben van Beurden and other senior executives at the Anglo-Dutch oil supermajor.

It wasn’t clear then exactly how that ambition would be measured by Shell. Now it is clear it is certainly not going to be by a ‘show me the gigawatts’ contest with transitioning fossil peers such as BP and Total, which are piling on renewable energy assets so fast it is hard to keep up – but have also faced stiff questions over the returns they can make in sectors such as offshore wind.

Instead, Shell seems to be positioning itself as the smart intermediary of choice for the energy transition, one not just with “access to green electrons” – its ubiquitous phrase of choice for renewable power – but with the trading, marketing and technology to become what it calls “a one stop shop” for both businesses and consumers.

“We want to be a leading power player in the world,” confirmed van Beurden, as he unveiled sharper targets for emissions reduction on the road to corporate net-zero by 2050.

“But the focus on being a leading power player is very much going to be on selling clean power.”

Commodity business?

Ahead of Thursday’s strategy update, some commentators had expected Shell to follow the likes of BP and Total in setting a big number, possibly rivalling the 50GW portfolio the former is pitching for by 2030, or the 35GW the French group already has on its books after a frenzied acquisition spree over the last 12 months.

However, van Beurden is having none of it. “We don’t believe in volumetric targets,” he told journalists, underling a resolutely “asset light” approach.

We’re not going to be saying ‘look at us, see these gigawatts going through’.

“We believe there is more value to be had to designing the right products and solutions for customers than just producing commodity green electricity… because it is a really commoditised game, producing green electricity.

“[Shell will be “focused on value not on volume. We’re not going to be saying ‘look at us, see these gigawatts going through’.

“It’s a different narrative, but I believe in the end it’s the winning narrative, at least for us.”

That does not mean that Shell won’t be investing in renewable energy projects, as van Beurden is keen to stress. “We will be causing investments to happen, we may even be participating at a major scale... but not with a view that we hold these investments as a producer of commodity green energy.” Instead, it's all about securing access to the electrons.

So, if Shell isn’t going to have gigawatts by the score of power capacity on its books, what exactly will it be bringing to the energy transition party?

Its answer is something called “incremental differentiated value”. Finance chief Jessica Uhl pointed to the 730MW Borssele 3&4 offshore wind farm Shell is advancing in the Dutch North Sea as a minority partner in the Blauwind consortium, where the oil major has tied up an agreement to take about half the power.

“[At Borssele] we have access to some 360MW that we’re selling to customers, but we only have some $100m of capital-employed tied to that project,” said Uhl.

“You don’t need to put a lot of capital at play to get access to the electrons.”

That power can be traded, used to produce green hydrogen or sold to “the Amazons and the Microsofts” of this world.

Uhl said an example of Shell adding value could be helping to ensure 24/7 green power supplies to an entire datacentre fleet.

Indeed, if you want a glimpse of the Shell of the future, it would be the power supply deal struck earlier this week to supply Amazon from another of its North Sea wind investments, Hollandse Kust North.

The same principle of adding value goes for biofuels and quite possibly hydrogen, says van Beurden, who claims the winning position in the future energy system “will not be in owning the most efficient electrolyser, but in unlocking the hydrogen market”.

As well as hydrogen, where it hopes to build a “double-digit market share” across the blue and green varieties, Shell will focus on strengthening its position in areas such as electric vehicles, as well as gas and chemicals.

In reality, Shell’s fossil peers are hardly blind to the opportunities for power trading, corporate electricity deals and the like. BP, for example, in September last year announced its own deal with Microsoft to supply renewable electricity for data centres globally. Other transitioning oil & gas players have also made it clear they will be seeking partners to unlock the value of the assets they own.

But Shell’s refusal to play the numbers game – which also extends to a refusal to put a target on reducing oil production, beyond saying it peaked in 2019 – sets it apart.

Van Beurden and his colleagues argue the only number that matters is the reduction in carbon intensity – and for that it has set targets on the road to net zero by 2050.

In terms of Capex, it plans to spend up to $3bn a year on renewables and “energy solutions”, out of a total of up to $23bn of total near-term annual investments.

Another number that will matter to Shell is its share price. The initial market reaction appeared underwhelming – the group’s shares were trading almost 2% lower in London on the afternoon following the strategy update.

'More of the same' or 'grotesque'?

Analysts at Jefferies said the strategy update amounted to “more of the same”.

“The most material change is on the carbon emission side, with the introduction of one of the most stringent carbon reduction plans in the sector. How this will be achieved remains partially unclear, based on the limited low-carbon growth targets provided,” said the Jefferies analysts.

Gabor Petroczi, director, natural resources at Fitch, was more positive, seeing Shell's investments in “marketing, EV charging infrastructure and integrated gas as posing relatively low execution risk with predictable economic returns.

Competitors are pivoting, but Shell’s big plan is to self-destruct.

“While long-term demand prospects for the ‘bridge’ products may be less favorable than pure green-energy projects, we see the current plan as reasonably balanced between managing the demands of the energy transition and execution risk,” said Petroczi.

Greenpeace was typically forthright, branding the Shell approach “grotesque”.

“Communities around the world have been flooded, while others are on fire. Governments are upping their commitments on renewables, while competitors are pivoting, but Shell’s big plan is to self-destruct and take the planet down with it,” said the environmental group.