MELBOURNE (REUTERS) - Royal Dutch Shell is facing protests over its takeover of green energy retailer Powershop Australia, with customers threatening to switch to other renewable energy providers to avoid becoming customers of a fossil fuel company.

Shell said on Monday it was expanding into Australia's household power market by teaming up with Infrastructure Capital Group to buy Meridian Energy's Australian electricity business, which has more than 185,000 customers, for A$729 million (S$718 million). The deal is expected to close in early 2022.

Activist group Environment Victoria said on Wednesday (Nov 24) it had terminated a six-year partnership with Powershop Australia as it was no longer tenable if Shell was going to own the business.

"You can't slap a bit of green paint on a multi-billion dollar pollution machine and expect us to ignore it," Environment Victoria Chief Executive Jonathan La Nauze said.

Powershop customers went on social media saying they had switched to other green energy providers and recommended competitors.

"@PowershopAus such a shame to hear you have been sold out to @Shell... Thanks for your previous service, but I made the switch to another provider today," Jen Basham said on Twitter.

Powershop said on social media on Monday that while its ownership was changing, its "commitment to our customers and the planet is not".

The deal kept the company tied to its wind and hydropower assets through power purchase agreements and its energy would still be 100 per cent carbon offset, it said.

A Shell Australia spokesman said the company was committed to halving its absolute emissions by 2030 and achieving net zero emissions by 2050.

The Powershop acquisition fits with its effort to become a "leading provider of clean Power-as-a-Service", she said.

"We look forward to working with Powershop customers to support their energy decarbonisation ambitions," the Shell spokesman said.