Equinor ASA will downsize its renewables unit and is starting discussions with unions concerning staff on the division.
The Norwegian firm turns into the most recent European oil and fuel producer to regulate its clean-energy technique because the trade faces the twin problem of rising prices and low returns. Equinor will prioritize profitability over development and undertake fewer renewables initiatives in fewer markets, in response to an inner memo seen by Bloomberg.
“Renewables is in a down cycle, and the following two to a few years shall be about getting in form to compete successfully when the trade rebounds,” Pal Eitrheim, head of the renewables unit at Equinor, stated within the memo. After having scrapped initiatives with “poor economics,” the corporate must do “much more to regulate to the brand new realities we face.”
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A spokesperson for Equinor declined to remark.
European oil majors have been below stress from buyers for a number of years to spice up money returns by specializing in their core petroleum enterprise. On the identical time the renewables sector — notably offshore wind — has struggled with rising rates of interest, provide chain bottle necks and value inflation.
BP Plc stated in in 2023 that it could pump extra oil and fuel than beforehand deliberate and pause its enlargement in offshore wind, whereas Shell Plc has scaled again plans to chop CO2 emissions and spend money on renewable energy.
For workers at Equinor, the corporate has began a “dialogue with union representatives” to decide on a course of, in response to the memo. Engagement with UK staff shall be via Works Councils and employees shall be invited to city corridor conferences to debate the modifications, in response to the memo. The primary of those was held on Thursday afternoon.
Whereas Equinor has remained dedicated to its long-term renewable targets, the corporate is in a section the place it “should shift priorities from development and optionality to elevated emphasis on profitability,” Eitrheim stated within the memo.
This 12 months is because of be “the busiest 12 months of execution ever” for Equinor’s renewables division, in response to the memo, as the corporate proceeds with three large-scale wind initiatives — Dogger Financial institution within the UK, Empire Wind 1 within the US and Baltyk 2 and three in Poland.
Whereas these initiatives stay on monitor and are forecast to require further personnel as they proceed, the corporate is lowering early-phase spending and administrative prices, and “simplifying” its strategy, in response to the memo.
The corporate’s renewables unit has suspended enterprise improvement actions in France, Spain, Portugal and Vietnam and is assessing its complete Americas portfolio to make cost-cutting measures the place doable. Relying on the end result of license awards in Australia, changes to initiatives shall be made in that market as effectively, in response to the memo.
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