BP makes first major move in support of new net zero emissions strategy, with $1.1bn move to secure stakes in wave of US offshore wind projects

BP has backed up its high profile pledge to put itself on a trajectory to net zero emissions with the announcement today it is teaming up with rival oil major Equinor to develop a fleet of US offshore wind farm.

Marking the company’s first move into the fast-expanding offshore wind market, BP announced today it is to pay Equinor $1.1bn to secure 50 per cent stakes in four planned offshore wind farms located in two existing offshore wind leases off the east coast of America.

The companies will now jointly develop the new projects, which are expected to provide clean power for over two million homes, while also working together to explore further opportunities in the US offshore wind market.

The move comes just weeks after BP unveiled sweeping plans to become a net zero emission company by 2050, backed by a pledge to increase its annual clean energy investment 10-fold to around $5bn a year and deliver 50GW of renewables capacity by 2050, up from just 2.5GW currently.

Bernard Looney, BP chief executive, hailed the new partnership as “an important early step in the delivery of our new strategy and our pivot to truly becoming an integrated energy company”.

“Offshore wind is growing at around 20 per cent a year globally and is recognised as being a core part of meeting the world’s need to limit emissions,” he said. “Equinor is a recognised 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 companies said the deal will see teams from both firms work on the Empire and Beacon offshore wind projects, although Equinor will remain operator of the projects in the development, construction and operations phases.

The Empire Wind lease area, which was awarded to Equinor in 2016, is 15-30 miles southeast of Long Island and has a total area of 80,000 acres. The area is set to be developed in two phases, with Empire Wind phase 1 having secured an offtake agreement in July 2019. The whole Empire Wind lease area has the potential to provide 2GW of capacity.

Similarly, the Beacon Wind zone covers a total area of 128,000 acres of federal waters off New England’s coast, approximately 20 miles south of Nantucket and 60 miles east of Montauk Point. When fully developed it is expected to have a total generating capacity of 2.4GW, sufficient to provide power to more than a million households in the Northeast US.

“This partnership provides an extraordinary opportunity for our two companies to work together in pursuit of our shared ambition – creating better, lower carbon energy for the world,” said BP executive vice president for gas and low carbon energy, Dev Sanyal. “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. We look forward to working with Equinor and together exploring further opportunities in the fast-growing US wind market.”

The deal is subject to regulatory approval, but is expected to close early next year. The developers are working to a schedule that would see first power delivered from the Empire Wind project by the mid-2020s.

Source : Businessgreen.com