Shell decided to exit the power value chain in China, which includes power generation, trading and marketing businesses, it said in a statement. The decision was effective from the end of 2023.
"We are selectively investing in power, focusing on delivering value from our power portfolio, which requires making difficult choices," Shell said.
According to Shell's website, Shell Energy China was one of the first wholly-owned foreign entities to participate in the China's carbon emissions market, and is also registered to trade in the China's power market.
The changes do not apply to Shell electric vehicle charging business, which is a key growth market for the company, a spokesperson said.
"We will work with our partners and customers to contribute to China's energy transition," Shell said.
Shell shares were down 0.8% by 1050 GMT, compared with a 0.23% drop in the broader European energy index.
As part of its drive to save up to USD 3 billion in annual costs, Shell has in recent months pulled out of the European retail power business and several offshore wind and low-carbon projects. It has also put U.S. solar assets up for sale and placed its giant refining and petrochemical complex in Singapore under review.
Shell has also made company-wide staff reductions, including in its low-carbon solutions division.
While reducing its presence in renewables and low-carbon energies, Shell plans to double down on natural gas, for which it expects demand to continue growing in the coming decades.
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