$200 Million Invested In Solar Power By BP To Reinvent Itself In Renewables

BP had made significant investments in renewable energy and was in a leading position among industry peers at a time when companies were going green. It was amongst the first oil majors to accept the linkage between fossil fuel burning and global warming.

And it had coined the slogan “Beyond Petroleum.”

But the Gulf of Mexico oil spill in 2010 ruined all the hard work it had done thus far.

And what appears to be an attempt to salvage that lost position, BP annpuncced an investment of $200 million against a large stake in Lightsource which is a British solar power developer.

There is increasing pressure from investors and governments on oil companies based out of Europe, including BP, to make a move away from fossil fuels like oil and gas – believed to be the root cause of climate change, and adopt cleaner energy sources, at least in the European region. While the French oil major Total spent 950 million euros for Saft, a battery maker, Norwegian oil giant Statoil is investing heavily in offshore wind production.

“The European majors feel under pressure to diversify, to get exposure to different technologies so they are not left out,” said Valentina Kretzschmar, an analyst at energy consultants Wood Mackenzie. “It is what a lot of their peer group is doing.”

In recent years, alternatives like wind and solar power is viewed to be sustainable business ventures and not merely a science experiment or playing an ornamental role in under political and environmental pressures. Returns of 7 to 10 percent on investments in renewable energy is a reality, estimates Wood Mackenzie.

In the gamut of traditional oil and gas companies, BP was viewed as a pioneering company in relation to environmental issues before the Gulf of Mexico crisis happened. It had made investments in wind power and biofuels as well as solar fuels.

According to the company, most its solar power projects have been closed down – some initiated as early as the 1980s, even though many of its wind projects in the US and its biofuel projects in Brazil are still running.

Referring to its latest investment in renewables, the company said that a 43 percent stake would be now available to BP with the $200 million investment and that would help it to rename the company as Lightsource BP. Two seats on the board of the company would also be taken by BP.

The companies said that Lightsource would be abele to expand its operations globally with the investment from BP as the company had until now been only focused on the UK market. Contracts for management of solar installations that would be enough to supply power to half a million homes are available with Lightsource. The company cerates and develops solar projects. This latest investment is however miniscule if the total capital expenditure of BP is taken into account which is about $16 billion this year.

“They need a renewable business to develop over time as part of energy transiting, but were lacking the ability to make solar profitable,” said Oswald Clint, an analyst at Bernstein Research. “Lightsource might be the solution.”

(Adapted from Nytimes.com)


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