BP plc, giving credence to its proposed evolution from oil and gas has aligned with fellow super major Equinor ASA in a $1.1 billion deal to develop a massive wind generation project offshore the East Coast.
The strategic partnership includes developing existing offshore wind license interests on the East Coast and jointly pursuing opportunities for offshore wind across the country. BP is purchasing a half-stake in Equinor’s Empire Wind and Beacon Wind assets; Equinor would be the operator.
Empire Wind, offshore New York City, covers 80,000 acres and is expected to have an installed capacity of 2 GW. Beacon Wind, offshore Massachusetts, has a total area of 128,000 acres and is expected to have an installed capacity of 2.4 GW.
“This is an important early step in the delivery of our new strategy and pivot to truly becoming an integrated energy company,” said BP CEO Bernard Looney.
BP early this year upended its autonomous upstream and downstream business distinctions and set a goal to reach net-zero emissions by 2050. The longer term corporate strategy is set for unveiling next week.
“Offshore wind is growing at around 20% a year globally and recognized as being a core part of the world’s need to limit emissions,” Looney said. “Equinor is a recognized sector leader, and this partnership builds on a long history between our two companies. It will play a vital role in allowing us to deliver our aim of rapidly scaling up our renewable energy capacity, and in doing so help deliver the energy the world wants and needs.”
The transaction is expected to be completed early next year.
Norway’s Equinor, which rebranded from “Statoil” to acknowledge its expansion into all things energy and beyond fossil fuels, has made some big alternative energy investments, including into offshore wind with partner Masdar. One project, Hywind Scotland, is the world’s first floating wind farm, with 30 MW capacity.
The deal with Equinor is a first for BP in the offshore wind market, but at one time the London-based major was one of the largest onshore wind generators in the Lower 48. Until it sold its U.S. wind generation business in 2013, BP was considered the 12th largest owner of wind power in the United States and the seventh largest investor in new capacity.
BP had built stakes in 16 operating wind farms in nine states with a combined generating capacity of about 2,600 MW. It also had a portfolio of projects with capacity estimated at 2,000 MW that were considered shovel-ready.
Its view of wind power has changed dramatically, and the market potential for offshore wind is huge, said BP’s Dev Sanyal, executive vice president for Gas and Low Carbon Energy.
“This partnership provides an extraordinary opportunity for our two companies to work together in pursuit of our shared ambitions — creating cleaner, better energy for the world,” Sanyal said. “It will leverage BP’s trading expertise and onshore wind experience with Equinor’s sector-leading track record in offshore wind to deliver value for our shareholders.”
BP is aiming to increase low carbon investments 10-fold to around $5 billion a year by 2030. The renewable generating capacity goal by 2030 is set at around 50 GW from 2.5 GW in 2019.
The potential for wind power could be huge. A recent BloombergNEF estimate sees the offshore wind sector expanding by 2030 to 190 GW from current capacity of 30 GW, possibly the fastest growth of any renewable energy sector. An American Wind Energy Association analysis also has determined that developing 30 GW of offshore wind could support up to 83,000 jobs and by 2030 deliver $25 billion annually in economic output.
“With wind an abundant resource, aided by a supportive regulatory environment and rapid cost reductions, offshore wind looks set to rocket,” BP management said.
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