Chevron announced it will build 500 megawatts of renewable energy plants to power some of its global facilities, in what amounts to a sizable scaling up of clean energy for an oil giant with comparatively few big investments in renewables to date.

Chevron will work with Canada’s Algonquin Power & Utilities, a growing global renewables developer, to build the plants over the next four years in the Permian Basin of Texas and New Mexico, as well as Argentina, Kazakhstan and Western Australia. The initial projects will be sited on Chevron-owned land, with construction to begin in 2021.

The renewables projects will be jointly co-developed and owned by Chevron and Algonquin, with Chevron buying the electricity through power-purchase agreements.

U.S. oil producers lag their European rivals in making strategic investments into clean energy companies and technologies, but as voracious consumers of electricity — and often in remote areas — they have begun taking a greater interest in low-cost wind and solar power. Deals like Chevron’s are increasingly common in high-renewables states like Texas.

In 2018 ExxonMobil agreed to buy 500 megawatts of wind and solar power from Ørsted in Texas, described at the time as the largest renewables deal ever signed by an oil company. Last year Chevron signed a 35-megawatt power-purchase agreement with SunPower to power its Lost Hills oil field in Kern County, California.

“I think the primary motivation is reliability,” said Alex Beeker, principal analyst at Wood Mackenzie. “The power grid in West Texas is so over-stressed from oil operations that it becomes necessary to pursue off-grid sources of power,” Beeker wrote in an email. “Renewables are a natural fit in West Texas [which has] plenty of sun and wind.”

While some Permian oil companies have adopted more environmentally friendly approaches over the past year — such as switching from diesel to cleaner natural gas to power their fracking equipment, or recycling their water — economic considerations remain the main motivator behind such moves, Beeker said.

Independent oil producer EOG, for example, is saving $200,000 per well by switching to natural gas for its power because it’s so cheap in the Permian Basin right now, he said.

U.S. oil companies lag in clean power investments

Facing more pressure to decarbonize than their American counterparts, Europe’s oil giants have executed on a series of low-carbon investments in recent years that have made them leaders in some clean-energy sectors — even as the total amount invested remains small compared to their overall spending.

This week Shell emerged as the joint winner of a 759-megawatt offshore wind project in the latest Dutch tender, and with a new twist: The offshore wind farm will incorporate several technology demonstrations involving floating solar, short-duration storage and green hydrogen. Shell has already established a significant position in the emerging U.S. offshore wind market.

BP owns a 50 percent stake in global solar developer Lightsource BP and earlier this month announced it will push into China’s commercial and industrial solar market in partnership with JinkoSolar, the world’s largest PV module maker.

While oil and gas projects have long been seen as more profitable investments than wind and solar plants, the calculus is changing as some oil companies adopt higher carbon prices in their forecasts. Last month BP embraced a carbon price forecast of $100 per ton for 2030, up from the $40 it factors in now. This week France’s Total slashed billions of dollars off the value it places on its oil sands holdings in Canada.

Chevron has dipped its toe into clean-energy sectors with an obvious overlap with its existing businesses, including a 2018 investment through its venture fund into ChargePoint, owner of the largest U.S. public network of electric vehicle chargers.

Chevron did not immediately respond to a request for further detail about its new renewables projects.

Chevron wants to invest in renewable power solutions that are “reliable, scalable, cost efficient, and directly support our core business,” Allen Satterwhite, president of Chevron’s Pipeline & Power unit, said in a Thursday statement.