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Challenges remain for Equinor’s renewable segment as it faced another quarter of losses. The company announced a downgrade to its renewable generation target to 70% growth on FY23.

Our view

Equinor released its 2Q24 results, confirming the risk to its renewable energy generation guidance (>4 TWh) that we highlighted last quarter. The company has now downgraded this guidance from 100% to 70%, reflecting the significant ramp-up needed. Although growth ambitions for renewables is strong, the company is struggling to deliver on earnings and capacity compared to peers. 

In our latest assessment, we ranked Equinor’s transition strategy last against its peers. The company has progressed the least on its NCI as of FY23 (-1% of -20% by FY30). With renewables as their only decarbonisation lever, outside of netting strategies such as CCS, more information is needed on how it will strategically deliver on its FY30 NCI target. Additionally, despite CCS’ materiality, Equinor has yet to provide any discrete disclosures for the business.

Investors engaging with Equinor should ask:

1) For disclosure on the dollar value of capex for Renewables & Low carbon solutions that forms the basis for its capex target, including a reconciliation between Renewable capex disclosed in its results.

2) The impact of renewables to meet its FY30 NCI target, and an indication of whether Equinor’s decarbonisation strategy is fundamentally reliant on netting strategies such as CCS. We estimate that nearly half of its 40% NCI reduction target by FY35 will rely on CCS. 

3) With renewable earnings still in the negative, how is Equinor positioning itself to build a competitive and sizeable renewables business to diversify oil and gas revenue streams.

Key findings