BP Acquires 9 GW Solar Portfolio in the U.S.

BP Acquires 9 GW Solar Portfolio in the U.S.

British oil and gas giant BP plc announced yesterday that it is purchasing 9 GW of solar development projects in the US from independent US solar developer 7X Energy, pouring $220 million and 1 GW of “safe harbour” equipment into the deal.

The projects are expected to meet bp’s laid down low carbon investment criteria, generating returns of at least 8-10%, the company said.

The move comes at an interesting time when oil companies are being held accountable, by courts and shareholders alike, for the massive amounts of greenhouse emissions they cause each year. For instance, a few days back, a district court in the Netherlands ruled that British-Dutch oil major Royal Dutch Shell was not doing enough to fight climate change and must reduce its carbon emissions by 45% (as opposed to the firm’s self-imposed target of 20% reduction) by 2030, as compared to 2019 levels.

Big Oil in the US also suffered blows from climate activists and institutional investors last week. Exxon Mobil and Chevron, for example, were at the receiving end of rebellions from shareholders over their failure to make a clear plan for a clean energy future. Exxon lost while defending itself against hedge fund activists’ campaign to have two of their own candidates become part of the company’s board to push it away from oil and towards a greener future. Chevron’s board was also outvoted by a majority of its shareholders who demanded that the climate action plan put together by Follow This, a Dutch environment protection group, be followed.

BP claims that its current acquisition of the solar portfolio from 7X Energy represents a significant step towards its target of growing its net developed renewable generating capacity to 20GW by 2025 and aim to increase this to 50GW by 2030. Till now, the firm has been a laggard, accused of paying lip service rathe than making a major pivot away from fossil fuels.

The company hopes that the deal will grow bp’s renewables pipeline from 14GW to 23GW. The assets will be developed through bp’s 50-50 solar joint venture Lightsource bp, a global leader in solar energy, applying Lightsource bp’s capabilities to accelerate bp’s renewables targets.

Activists have been warning that governments and energy companies, especially major pollutants among them, have been making ‘voluntary’ targets without specifying the consequences of failing to meet those. ‘Net-zero’ goals that extend to the middle of the century prioritise convenience and profit margins of the companies over the urgent need to act now to fight climate change. BP’s commitment to its self-declared goals might also be tested in the near future.

Dev Sanyal, bp executive vice president of gas and low carbon energy, has said, “With this purchase, we are continuing to put our strategy in action as we grow our renewables business in a deliberate and disciplined way,” adding, “We will bring the industry-leading expertise of Lightsource bp together with the breadth of bp’s integration capabilities in the US to develop this portfolio of projects. This is a significant step as we continue to deliver on our net zero ambition.”

Solar energy is the fastest growing power source in the US and is expected to quadruple over the next 10 years. It currently accounts for more than 40% of all new electricity generating capacity added in the US.

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Soumya Duggal

Soumya is a master's degree holder in English, with a passion for writing. It's an interest she has directed towards environmental writing recently, with a special emphasis on the progress being made in renewable energy.