BP plc, long North America’s largest natural gas marketer, as well as one of the biggest global natural gas and oil, in recent days has turned its attention to bulking up its alternative fuels portfolio.
Still a huge wind developer in the United States, BP operates nine wind sites in six states and holds an interest in another facility in Hawaii. Together they have a net generating capacity of slightly more than 1,000 MW.
Over the past few days, the supermajor has expanded its renewables business in other areas. Earlier this year it established a $100 million fund to further reduce greenhouse gas emissions across its operations.
At the CERAWeek by IHS Markit conference held in Houston earlier this year, BP CEO Bob Dudley had urged his peers to work on energy systems that were “cleaner, better and kinder to the planet...We need to demonstrate that we share the common goal of a low carbon future and that we are in action toward it. The stakes are too high not to.”
In one of the latest transactions, the management teams of Lightsource BP and BP agreed to equalize their holdings to create a simplified 50-50 joint venture (JV). BP two years ago invested $200 million into Lightsource, a large-scale solar developer, for an initial 43% stake. The investment was to be used to fund a worldwide growth pipeline of 6 GW, with projects underway in the United States, India, Europe and the Middle East.
As part of the new transaction, BP agreed to purchase newly issued equity to support an ambitious drive toward 10GW of developed assets by the end of 2023. Strategic decisions would continue to be taken jointly, with each partner now having an equal number of nominees on the Lightsource BP board.
In the two years since BP’s first investment, Lightsource BP’s activities have expanded from five to 13 countries and has built a development pipeline of more than 12 GW.
“BP is committed to helping meet the world’s rapidly growing demand for low carbon energy,” BP’s Dev Sanyal, CEO of Alternative Energy, said. “Solar, which is predicted to increase by a factor of 10 by 2040, plays a key role in this energy transition. That is why we want to invest more in Lightsource BP and to deepen our partnership.”
In another transaction announced this month, BP agreed to a series of innovative power deals with Amazon Web Services (AWS) to supply renewable energy to the European data centers that drive the AWS cloud platform. The deal is in line with BP's growing sustainable power business, which includes tailored power purchase agreements (PPA) within the corporate sector.
Beginning in 2021, BP agreed to provide AWS with renewable energy from more than 170 MW of newbuild wind and solar projects in Sweden and Spain. The expectation is to grow this relationship to more than double the capacity to more than 400 MW.
"BP and AWS are both targeting reductions in emissions from their respective operations,” said BP’s Robert Lawson, COO for Global Gas at BP Supply and Trading. “One way BP can play an important role in helping our customers is by using our trading capability and scale to deliver innovative, reliable and flexible supplies of low-carbon and renewable power to major corporate customers and partners ."
The expansion of its corporate PPA business was called an example of BP's focus on improving its products and services to enable customers to reduce their emissions.
BP and Bunge, which formed a JV in July, said they would equally hold stakes in BP Bunge Bioenergia, a bioenergy partnership that combines their Brazilian bioenergy and sugarcane ethanol businesses.
“The continued growth of biofuels will be a key enabler to decarbonizing transportation,” BP management said. “Brazil is one of the world’s largest and fastest growing markets for biofuels and, through this transaction, BP Bunge Bioenergia is now the second largest operator by effective crushing capacity in the Brazilian bioethanol market.
BP’s Mario Lindenhayn is to become executive chairman the JV, while Bunge’s Geovane Consul would be CEO.
“Biofuels is an increasingly important part of a lower carbon energy system,” Lindenhayn said. The JV “provides a strong foundation to build upon the capabilities of both organisations to develop ideas for growth and deliver significant operational and financial synergies.”
The partnership has 11 biofuels sites in five Brazilian states, with more than 10,000 employees. Total crushing capacity is 32 million metric tons/year of sugarcane capable of producing more than 1.5 billion liters of ethanol, 1.1 million tons of sugar and exporting 1,200 GWh of electricity to the national grid in Brazil.