BP has taken its first step into the offshore wind market as it advances plans to diversify away from fossil fuels and reach net-zero emissions by 2050.
The UK oil major will pay $1.1bn to Equinor, Norway’s state-backed energy firm, for a 50% interest in both the Empire Wind and Beacon Wind assets off the eastern US coast.
The arrangement will also involve a strategic partnership through which the two companies will explore further offshore wind opportunities in the US.
The waters off America’s coastlines have been tipped for significant growth in wind energy over the coming years. The American Wind Energy Association estimates a potential overall offshore electricity-generation capacity of more than 2,000GW.
US offshore wind venture ‘important step’ in BP diversification strategy
Earlier this year, BP announced a major strategic overhaul to achieve net-zero emissions by mid-century, a plan that will involve greater emphasis on renewable energy and a move away from its traditional focus on fossil fuels.
It revealed last month that it aims to grow its renewable-generating capacity to 50 gigawatts (GW) by 2030, compared to 2.5GW in 2019, raising its annual investment into the sector ten-fold to around $5bn a year.
Further details of the firm’s net-zero strategy are expected to be revealed next week at a company event.
BP chief executive Bernard Looney said: “This is 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% a year globally, and is recognised as being a core part of meeting the world’s need to limit emissions.
“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.”
Empire and Beacon wind farms could power more than two million US homes
Equinor acquired leasing rights to the Empire Wind project in 2016 at a cost of $42.5m. The 80,000-acre site is located southeast of Long Island, and has an estimated electricity-generation capacity of 2GW.
Beacon Wind is planned for an area of 128,000 acres approximately 60 miles east of Montauk Point and 20 miles south of Nantucket off the Massachusetts coastline, and has a final estimated generation capacity of 2.4GW.
Taken together, the offshore wind projects will supply enough clean electricity to power more than two million US households.
Equinor chief executive Eldar Sætre said: “Our partnership underlines both companies’ strong commitment to accelerate the energy transition and combining our strengths will enable us to grow a profitable offshore wind business together in the US.”
Like BP, the Norwegian firm is seeking to reduce its reliance on fossil fuels as it aims to reduce its carbon footprint in line with global climate targets, and has targeted a renewable-generation capacity of 4-6GW by 2026 and 12-16GW by 2035.
Last month, Sætre announced his resignation from his role as CEO, and his successor Anders Opedal – a 23-year company veteran who will take charge in November – has committed to accelerating Equinor’s shift to becoming a “broad energy company” with a focus on growing its renewables portfolio.
Under the agreement with BP, the Norwegian firm will continue its role as operator during the construction and operations phase for both assets, with both wind farms to be staffed equally between the two companies “over time”.
