Global commodity traders are ramping up investments in the renewable energy sector as demand for fossil fuels is expected to reach the peak sooner due to the COVID-19 pandemic. At the same time, consumers and investors are increasingly looking to support clean fuel and low-carbon projects. Trafigura said renewables would be the third pillar of its operations, besides trading business and oil and metals-focused assets.
Trafigura’s CEO Jeremy Weir said the company is pushing into power and wind projects despite concerns about lower returns compared to other energy businesses. He said that the company would explore possibilities to invest in the renewable energy sector in both OECD and emerging countries. The company and fund manager IFM Investors have set up a joint venture called Nala Renewables that will invest in 2 GW of wind, solar, and battery projects worldwide.
Trading house Mercuria recently agreed to invest in the US-based Broad Reach Power, a $1.5-million renewable energy fund which focuses on domestic utility-scale power storage operations. CEO Marco Dundand said Mercuria would spend half of its investment in renewables in the next five years. However, he also signalled caution in green investments, saying billions of dollars lost due to poor choices in renewable energy.
The world’s largest independent oil trader Vitol has about 500 MW in its renewable investment portfolio that is online or will come online soon. The company has already had a power plant and intends to construct a carbon-capture project in Britain. It also aims at developing its low-carbon businesses, including in Africa.
Gunvor’s CEO Torbjorn Tornqvist said the company would invest 10% of its equity value in renewables. The investments will include the development of wind and solar projects and advancing the innovation in battery technologies.
