Royal Dutch Shell‘s decision to partner with Makani, a pioneering start-up in offshore power-generating kites and a subsidiary of Alphabet, will put the oil and gas giant at the forefront of clean energy development.

Kite power-generating systems

Since 2016 Shell has invested in clean energy through its New Energies division establishing projects in the Netherlands and the US. In the same year, Shell invested in Kite Power Systems, a British start-up.

The higher demand for electric cars has increased the need for car charging stations, furthering the business case for partnerships such as Shell’s decision to team-up with Makani.

With the help of offshore power-generating kites, Shell could provide renewable electricity to their charging stations, reducing fossil fuels consumption and costs.

The generation of a potentially highly lucrative revenue stream will appeal to Shell as car manufacturers are under pressure by governments to build more clean energy vehicles.

However, not only could Makani help Shell develop competitive advantages in clean energy technology, but it could also generate meaningful revenues in the process.

Makani has substantial potential, but years of development are required in order to realise viable revenues and, with the right investment and vision, it is likely to succeed.

Makani is a driving force of Alphabet revenues

The wind-based firm is expected to have a big impact on the future revenues of Alphabet. As Makani grows bigger, the company will attract more partnerships and improve its prospects for investments which will allow the company to move freely and produce more innovative ideas about power-generating kites.

For a company which has not produced any commercial products yet and is focusing mostly on research, partnerships and investments are vital to creating sustainability. Furthermore, such partnerships will help Makani to grow in expertise and will make the firm more attractive to potential new partners.

Consider the downsides of air power

One major issue of airborne systems is they require a lot of air space. In addition, the technical challenges of making such a system are colossal, requiring considerable capital input.

However, the Makani airborne systems are not in the early stages of development, meaning prototypes have already been produced and tested. Furthermore, a key competitive advantage is the capacity to be placed in offshore areas where plentiful air space and heavy winds are present.

The power-generating kites can be tethered to land, without requiring any kind of additional bases, reducing production costs.

Such adaptability at present opens up revenue potential rivals are struggling to match, opening the possibility of Alphabet and Shell receiving a handsome return on their partnership.