As the world’s energy giants push into wind, solar and other renewable sources, they are tasked with another kind of exploration: seeking out new sources of green technology.

Carbon-exploration behemoths, like BP, are scouting out and enlisting startups to help during their transition into all-round energy companies. Knowing they cannot develop the required innovation fast enough in-house, the big corporations are scouting the world for start-ups with the promise of new technology to meet their needs.  

“Our clients are investing massively in becoming energy companies more than oil and gas companies and we need to help them,” said Aurore Dochy, an early investment associate at France’s TechnipFMC, which provides services to oil and gas companies.

European oil and gas giants, faced with increasing public concern about pollution, want to develop new businesses in renewables as they pivot away from carbon-based fuel to generate clean electricity.

France’s TechnipFMC, which provides services to the oil and gas industry, is just one of a growing number of investors  searching for new technology in materials and industrial processes, as well as sustainability solutions.

Investors in renewable energy start-ups foresee large, deep-pocketed partners as the legacy energy giants take strategic positions in small companies. Investors can also enjoy faster, bigger exits as the large companies absorb the minnows in order to fully integrate their solutions.

“We’re looking for small, nimble partners,” said Zachary Wilcock, manager of intelligent operations at BP, which owns 43% of Lightsource BP, Europe’s largest solar developer.

BP also invests in promising start-ups, putting $20 million in Storedot, an Israeli company that in June tested a new battery for a motor scooter capable of charging in just five minutes.

BP also is partnering with Fieldbit, an Israeli company that provides augmented reality tools to energy and industrial companies that help technicians find and fix problems before they can cause damage. The partnership gives BP the

solution to protect its hardware, while giving Fieldbit experience and exposure, Wilcock said.

“We’re looking for partners that can handle a level of chaos,” Wilcock said.

The appetite for such innovation is growing. BP forecasts that renewables will provide 30% of global power in 2040, while McKinsey says they will account for more than 75% by 2050.

European companies in particular are opening sustainable energy divisions or re-inventing themselves altogether.

“We’re going from being a pure oil and gas company to become a broad energy major. We will develop oil, gas, wind and solar power,” Norway’s Statoil said in May 2018, announcing its change of name to Equinor. Spain’s Repsol pledged to spend 2.5 billion euros from 2018-2020 on low-emission businesses as it transitions to become a general energy company and reduce its carbon footprint.

Royal Dutch Shell, the world’s second-biggest oil explorer, said in March 2019

it planned to become the world’s biggest power company within 15 years. In March, Shell’s new energies division acquired the Sonnen Group, a pioneer of technologies for clean, decentralized and connected energy systems and was part of consortium investing in offshore wind farms that will supply a million households with clean energy by 2023.

“We are using technology to fulfill our climate change roadmap,” Juan Monterroso, Repsol’s director of innovation and sustainability told a Tel Aviv conference on the digitalization of the oil and gas industry in June. “At Repsol we want to be part of the solution in terms of climate change, developing leading-edge materials and being more efficient.”

In July, Repsol added two wind projects and a solar field generating a total of 800 megawatts to its blooming renewables portfolio, fulfilling 90% of its 3-billion-euros plan to achieve low-emissions generation capacity of 4,500 MW by 2025. Repsol has invested in two solar energy companies: Viesgo and Valdesolar Hive.

“Digitalization has an enormous potential to improve energy sector operations and efficiency throughout the production and consumption chain,” said Enrique Fernandez Puertas, Repsol’s head of digital transformation and IT strategy. The company is looking for tools to help cut energy demand and emissions from  complex industrial processes, as well as those with consumer applications in shared mobility, Puertas said.

Harold Wiener, managing partner of Terra Venture Partners in Jerusalem whose partners include France’s EDF Energy and whose portfolio of more than 30 impact investments includes Solaround, said the upside of strategic investments from energy giants is clear: “Their power, their presence in the market, the fact that you are with a big guy and they will protect your technology.”

But matching small, quick-moving start-ups to industrial giants is not always easy.

“We need to run. If we don’t run, we fall,” said Wiener. “The corporates in general are very big and it’s like moving the Titanic until you find the right person who will help you.

“Oil and gas is the mother of the corporates. They are big, they are very slow, and their processes take years and years,” he said.

While energy companies are prepared to risk hundreds of millions of dollars sinking wells without being sure of any return, they balk at risky investments in technology, he said.

“They prefer to pay 20 or 100 times more but not risk $1 million or $2 million at the beginning. That’s the most important mistake they are making.”