Norwegian energy giant Equinor has announced plans to downsize its renewable energy unit, marking a strategic shift as the company looks to prioritize profitability over expansion. According to an internal memo, Equinor will scale back its renewable energy projects, focusing on fewer markets moving forward.
This move places Equinor among other European oil and gas producers adjusting their clean energy approaches due to increasing costs and diminishing returns in the sector.
“Renewables are currently facing a down cycle,” stated Pal Eitrheim, head of renewables at Equinor, in a company note. “The next two to three years will be about positioning ourselves to compete effectively when the market rebounds.”
The company plans to scrap projects that demonstrate poor financial returns as part of this strategy. Eitrheim emphasized the need for further adaptation to the current economic landscape facing the renewable energy sector.
Like Equinor, other European oil majors are also under pressure from investors to boost shareholder returns by focusing more on their core oil and gas businesses. Meanwhile, the renewable energy industry, particularly offshore wind, has been hit by rising interest rates, supply chain challenges, and inflationary pressures.
BP made a similar decision last year, increasing its focus on oil and gas while pausing its expansion into offshore wind. Shell, too, has scaled back its carbon reduction plans amidst these economic challenges.