LONDON (Reuters) - Spanish oil company Repsol (BME:REP) will develop more than 1.7 gigawatts (GW) of renewable energy projects in Italy, costing around 500 million euros ($550 million), the company's renewables head told Reuters.
Some European oil and gas companies such as Shell (LON:RDSa) and BP (LON:BP) have expressed caution about a pivot to renewables in recent months following record profits on bumper oil and gas prices, but Joao Costeira, Repsol’s executive managing director of Low Carbon, said Repsol planned to stick to its renewable goals.
“We should never get confused by discontinuities in the market or blips - no matter how important and dramatic such as in the case of the impact of the Ukrainian war - with the long-term trends,” he said in an interview.
Repsol has a target to grow its renewable capacity to 6 GW globally by 2025 and 20 GW by 2030, up from around 2 GW today.
"We feel comfortable with the targets that we have, both on quantity and on profitability," Costeira said.
The returns available from renewable projects have been under pressure over the past few years due to rising commodity and component costs and supply chain issues.
However, Costeira said Repsol's target of double digit returns on renewable investments was still achievable.
“We have also seen an increase in the price of energy, we have seen an increase in the price of green certificates, and we are already seeing stabilisation in the cost of some of the components," he said.
"We believe there may be a transitory year, but in the medium term we feel very comfortable with our target,” he said.
Repsol said it expected to spend around a quarter of its capital spending on renewable projects this year.
The Italian portfolio will comprise of 943 megawatts (MW) of wind power and 825 MW of solar, with construction of the first projects to begin later this year and early next year with most of the portfolio becoming operational from 2025.
The bulk of Repsol's existing renewable portfolio is in Spain with some capacity also in the United States, Chile and Portugal.
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