ReallyVeryFoolish wrote:Indeed, that's what I am wondering. The question therefore is whether the extra diversity and the portfolio management is worth paying for. I am thinking on balance, in a fairly immature market, that perhaps it is worth it. But again, perhaps the management will do a rubbish job.
When I listened to yesterday's starter pitch on the BP webcast my brain hit a "does not compute" moment. They were saying that they were going to do all this renewables stuff bigger/faster/cheaper/lighter/more-profitably because they were BP and had unique capabilities in project management and etc.
Translated that told me that BP either think that the existing renewables industry is stupid & useless, or that BP doesn't think that but thinks it can say that so as to justify BP's investments. Either way to my mind is plain wrong, as existing renewables projects/technology are in the main very well done, and ordinarily are being executed at an appropriate scale and in a well thought-out pipeline. I am still struggling to see what additional value BP will bring to the party, and as a BP shareholder (at the moment) that worries me. Ditto for Shell by the way. As my GF said to me, maybe I should be entering into a phase of "managed decline" of my investments in BP and Shell.
I have the same problem with this lot - is it really an immature market any longer ? Surely not. If not, where is the extra value really coming from, or is it not of value ?
I think this market is indeed immature in that:
a) opportunity is for the renewables to scale massively
b) industry structure is not that embedded yet.
The one technology that seems to be getting competitive at scale on generation is off shore wind.
BP (or Shell) could decide that they have the offshore engineering skills, large project management, big ticket financing to really start making some vertical integration in this arena.
Think the scale in terms of buying VESTAS, buying up most of the North Sea wind operating licenses, taking a stake in NG, + doing the equivalent in Belgium, Netherlands etc
All of the above is just off the top of my head, and I am not saying that these particulars are feasible/sensible, but both BP (avowed sea change in direction under Looney) and Shell have the means to shake things up in a major way