Shell, Total CEOs Question Solar in Room Full of Solar Investors

(Bloomberg) -- When executives from some of the world's biggest oil companies question the ability of solar energy to make money in a roomful of renewables investors, awkwardness ensues.

That's what happened Thursday at the Energy for Tomorrow conference in Paris, where the chief executive officers of Royal Dutch Shell Plc and Total SA said solar power isn't profitable.

“Growth of renewables has been remarkable but capacity of industry to make money in that segment has been remarkably absent,'' Shell CEO Ben van Beurden said during a panel discussion. “The 10 largest solar companies collectively never paid a cent of dividends.''

Patrick Pouyanne, Total's chief, agreed. “You don't have a single solar company today making cash out of the business,” he said. “We don't today generate cash in the solar industry. This is the reality.'' Total owns a controlling stake in SunPower Corp., the second-biggest U.S. panel producer.

Investors from venture capital companies to developers were quick to defend their track records, and their balance sheets. 

Not a Charity

“We are making profits, we're not a charitable business,” said Paddy Padmanathan, CEO of Acwa Power International. The Saudi Arabia-based developer is building solar projects with prices between 4.5 and 5 cents a kilowatt-hour. “We are actually making profits and we are doing this with renewable energy, solar PV.''

Renewable energy surpassed coal in terms of cumulative capacity last year, according to the International Energy Agency. Investment in the sector hit a record high with $348 billion, data from Bloomberg New Energy Finance showed.

“Fundamentally, sustainability beats unsustainability,'' said Scott Jacobs, CEO of Generate Capital, a San Francisco-based renewables investor. ‘'I will beat you. I have beat you.''

Wal van Lierop, president of Chrysalix Venture Capital, pointed to a solar company that's received backing from both his company and Shell, and said perhaps van Beurden was not aware of their connection. 

The Vancouver-based company supports clean technologies and resource management, and has invested in Glasspoint Solar Inc., which uses solar energy to produce steam for enhanced oil recovery. A project in Oman, with more than 1 gigawatt under construction, is one of the biggest in the world, and it's “in the money,” van Lierop said.

Total's Pouyanne cautioned that the renewable energy industry may be headed for a downturn, and is losing favor with decision-makers.

Governments around the world have supported renewable energy, and he said some may be reevaluating their positions. “Maybe we don't have to support them anymore because we have budget issues,” he said.

To contact the reporter on this story: Anna Hirtenstein in London at ahirtenstein@bloomberg.net. To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net, Will Wade, Stephen Cunningham