Shell, one of the world's largest energy companies, is making significant changes to its business strategy by stepping back from new offshore wind investments and splitting its power division. This move comes as part of a comprehensive review initiated by CEO Wael Sawan, aimed at reducing costs and focusing on activities with the highest returns. The decision reflects a broader trend among major energy companies to reassess their investments in renewables amid rising costs and supply chain challenges.

Shell's decision to slow down its offshore wind investments is part of a strategic shift to prioritize oil, gas, and biofuels, which are seen as more profitable in the current market environment. The company has stated that while it will not lead new offshore wind developments, it remains open to participating in projects where commercial terms are favorable.

The power division of Shell Energy, which encompasses renewables, power generation, and customer supply, will be divided into two separate units: power generation and trading. This restructuring aims to enhance focus, accountability, and delivery within the company. Greg Joiner will head the new Shell Power unit, while David Wells will lead Shell Energy.

This strategic pivot by Shell mirrors similar moves by other energy giants like BP and Equinor, who have also slowed their investments in renewables due to investor pressure to boost returns. The energy sector has been grappling with the impact of Russia's invasion of Ukraine and a decline in profitability for many renewable projects.

Despite the slowdown in new investments, Shell will continue to develop offshore wind projects that are already underway. The company has recently retreated from several projects in South Korea and the United States, reflecting its cautious approach to new ventures in the sector.

Shell's strategic review and restructuring efforts are part of a broader plan to grow its liquefied natural gas division and stabilize oil production by the end of the decade. However, these changes have sparked criticism from climate-focused investors and activists, especially after Shell weakened its 2030 carbon reduction target and scrapped a 2035 objective earlier this year.