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Shell (RDS.A) Clinches A$3.2B Battery Storage Deal From NSW

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Royal Dutch Shell (RDS.A - Free Report) recently won a 10-year power supply deal worth A$3.2 billion from Australia's New South Wales (NSW) state, which includes delivering battery back-up power for wind and solar energy.

The company officials informed that the battery, which will be developed by the privately-owned partner Edify Energy and be operational by early 2023, will alleviate worries about electricity supply problems that are anticipated to stem from the shutdown of AGL Energy's coal-fired Liddell power station after two years. The news comes within days after the federal government announced its intention to construct a taxpayer-funded A$600 million worth gas-fired power plant in NSW.

This battery, according to NSW state energy minister Matt Kean, will help keeping the lights on and prices under control during peak energy hours. Besides, this will motivate additional deployment of renewable energy. He emphasized that the battery will be erected alongside the state's Darlington Point Solar Farm, one of the largest solar plants connected to the national grid.

Shell through its subsidiary Shell Energy, the former ERM Power business that the oil major purchased in 2019, won the contract to serve the state government, which is NSW's second-largest power user.

Shell agreed to accept 60% of the battery's power as part of an agreement with Edify Energy. Management is thrilled to have the latter as the company’s battery energy storage partner in their joint effort to address the NSW administration's requirement of an innovative power solution.

The unit CEO Greg Joiner in his comments about the project said, “Shell Energy recognizes that batteries have an important role to play in transitioning to and managing risk in a lower carbon energy future. This long-term services agreement is a model for how large energy users can access dispatchable power like battery storage, which complements renewables, while contributing to a cleaner and more resilient power system.”

About Shell

This integrated energy player belongs to a global group of energy and petrochemical companies. It is involved in all phases of the petroleum industry right from exploration to final processing and delivery. The company recently released first-quarter 2021 earnings results wherein the bottom line came ahead of the Zacks Consensus Estimate by 3.8%.

Zacks Rank & Key Picks

Shell has a Zacks Rank #3 (Hold), currently.  Some better-ranked players in the energy  space are SilverBow Resources Inc. (SBOW - Free Report) , Matador Resources Company (MTDR - Free Report) and Continental Resources, Inc. (CLR - Free Report) , each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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