Shell 2024 Financial Results, Mitsubishi Reviews Offshore Projects

On News Flash, Allen and Phil discuss Caverion's acquisition of
Huolto-Lepistö, Mitsubishi re-evaluating their offshore wind assets
and Shell's 2024 financial report. Fill out our Uptime listener
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YouTube channel here. Have a question we can answer on the
show? Email us! Welcome to Uptime News Flash. Industry news
lightning fast. Your hosts, Allen Hall, Joel Saxum, and Phil Totaro
discuss the latest deals, mergers, and alliances that will shape
the future of wind power. News Flash is brought to you by
IntelStor. For market intelligence that generates revenue, visit
www.intelstor.com. Allen Hall: Well Phil, a busy week in mergers
and acquisitions. Caverion has acquired Huolto-Lepistö’s, a wind
turbine maintenance business. Now this acquisition gives Caverion a
new base on Finland's west coast. And the acquired business
specializes in wind turbine service lifts. Repairs, inspections,
and maintenance. There does seem to be a lot more activity in
Finland Phil Totaro: for wind. Yeah. And, and as their installed
base grows they have a lot of large turbines up there in, in
Finland. So I think the average, if I remember correctly based on
our data and Intel store, the average turbine size in Finland these
days is Something like. 5. 5 megawatts and upwards of like 140
something meter rotor. Again, taking the entire installed base in,
into account. So, growing installed base, big turbines, big
responsibility, and. Admittedly, I don't know very much about
Kaverian as a company, but looking into it after this deal was
announced earlier this week it's, it's very interesting how they're
trying to position themselves. And the fact that they want to go
after the, the wind services market also demonstrates, I think that
they're making a commitment to a segment that they see a lot more
growth potential with. Allen Hall: Over in Japan, Mitsubishi
Corporation is reviewing its offshore wind projects due to
significant changes in the business environment. Now, the company
leads consortia that won three projects in Japan's first state run
offshore wind auction in 2021, and those projects total about 1. 7
gigawatts of capacity. Capacity. The partner company, Chubu
Electric, posted an 18 billion yen loss on these projects. It looks
like Mitsubishi is trying to reevaluate the profit margin on these
projects, and with the high inflation in Japan and maybe even
stagnation being discussed, it's going to get a little rough for
Mitsubishi. I wonder if they're going to finish these projects.
Phil Totaro: Yeah, well, it's funny because Japan was a market with
their offshore wind potential that looked, poised to take off. They
heavily invested in floating offshore wind demonstrator projects,
more than a decade ago. They have a finite amount of, of space on
land, obviously, where, They can install onshore wind and solar for
that matter. So the exploitation of offshore wind looked like a
really promising segment to the market. But they've never been able
to get their act together. And I mean, this is frankly a very
common thing amongst a lot of governments that, that have a lot of
offshore wind potential, resource potential. But they don't have
the right structure in place. And you could say the same thing
about South Korea. You can say the same thing about Brazil. That
they, they've got a tremendous amount of interest and enthusiasm.
And frankly, people that want to invest money there, including
Mitsubishi, but if they don't get a sense of like how they're going
to see a return on, on these investments, then, I guess I can't
blame Mitsubishi at this point for, for having to reevaluate the
market. Allen Hall: No, Mitsubishi being the global company at
which it is. is very financially responsible. So if you watch the
way they run their different divisions, they are paying attention
to the bottom line. Now they'll be willing to extend out some of
these projects knowing that they're going to come to completion and
there's going to be a revenue stream, but offshore wind for them
seems to be a little bit less on the margins than they want. So.
Big things happening in Japan. Shell, obviously a huge oil and gas
company and dabbling in renewables, achieved a huge amount of cash
flow in 2024, almost 40 billion in free cash flow. And the company
delivered over 3 billion in structural cost reductions since 2022.
All this is being announced in their 2024 financial report. Phil,
when you watch Shell and watch the amount of money they're making
in oil and gas, and now they're leaving the Atlantic Shores
offshore wind project off the coast of New Jersey, what's the
writing on the wall here for Shell? Is it just oil and gas? Is it
just making big dollars pumping oil out of the Gulf of America?
Phil Totaro: Well, I mean, at the end of the day, you're, you're
talking about a company that that's their bread and butter. And I
mean, Joel's mentioned it on the show before that companies that
don't necessarily get enough return on investment out of renewables
are, are likely to pivot back to, their core competency. So you've
seen BP do a similar thing where they had a bunch of layoffs and
they've re Purposed a lot of capital into, oil and gas projects.
Shell is now following that same approach. They've recently
announced a number of layoffs and some executive repositioning
within their organization. And it now looks like, particularly to
offset some of the impairments and other losses that they incurred
from their renewables portfolio, which includes a modest amount of
onshore wind and solar. But certainly a large chunk of, of
offshore. Yeah, yeah. It sounds like it's pumping oil and gas till
the cows come home.