The development and commercialization of solar PV technology in the oil industry

In diversifying energy supply, the transformation of the energy industry has been identified as a key challenge for a sustainable energy future. This suggests that incumbent firms in this industry have a vital role in the development and commercialization process of renewable energy technologies. This paper provides a comparative analysis of oil and gas firms’ strategies regarding solar PV technology investments, a renewable energy technology that has seen explosive growth of late. The main aim is to examine the strategic approach of incumbent firms in the oil and gas industry towards the development and commercialization of solar PV technology. To investigate this, a multiple case study has been conducted within the European oil industry, focusing on the three largest oil and gas firms: BP, Royal Dutch/Shell, and Total. Findings show that oil and gas firms have difficulties with integrating solar PV technology in their supply chain. The analysis suggests that it is uncertain whether all oil and gas firms will abandon solar completely, as this depends to what extent they are able to generate profits. Nevertheless, there is currently a trend in the oil industry of leaving solar and positioning towards a ‘recarbonization’ of business activities.

Research Highlights
► Oil and gas incumbents have experienced difficulties in integrating solar technology in their supply chain and therefore established fairly independent business units, serving niche markets outside mainstream markets for oil and gas.
► It is uncertain whether all oil and gas firms will abandon solar completely, as it depends to what extent they are able to generate profits with these activities.
► The competitive strain and increased turbulence in the oil industry have led to erratic investment behavior of oil firms and, as a consequence, renewable energy projects in which incumbents are engaged are often cancelled for reasons which have nothing to do with the market viability of renewable energy.
► There is currently a trend in the oil industry of leaving solar and positioning towards a `recarbonization' of business activities.