“BP’s $7 billion annual buyback program does not appear to be covered from 2025 onwards,” HSBC’s Kim Fustier said in a note last month when the bank downgraded the company.
The wind farms, spread across seven states, are all operational and have a combined capacity of 1.7GW, of which BP owns 1.3GW. Analysts at RBC Capital Markets said they could be worth more than $2 billion.
“This is another indication that BP is streamlining its energy transition strategy, and there are likely interested buyers for these assets that would be worth more than implied by the stock, which is likely close to zero,” said Biraj Borkhataria, an analyst at RBC.
BP has an additional 12.7GW of onshore wind energy pipeline globally, but did not comment on what would happen to potential U.S. projects. A person close to the company said the sale was of BP’s entire onshore wind business.
The oil company does not break out earnings from its onshore wind business, but its gas and renewables arm had a replacement cost benefit of $8.7 billion last year.
Solar is now challenging wind as the largest source of renewable electricity generation on the U.S. power grid. BloombergNEF expects nearly three times as much solar capacity to be installed as wind in the U.S. from 2024 to 2035, with a total of 737GW of new solar projects and 199GW of new wind projects.
BP has put bp Wind Energy, its US onshore wind business, valued at about $2 billion, up for sale as it trims its renewables business and sells off unprofitable assets.
The British oil company said it would sell all nine of its wind farm companies and its stake in a 10th in Hawaii to focus on Lightsource BP, the solar business it is in the process of acquiring.
BP also wrote down the value of its US offshore wind business by $1.1 billion last year after struggling to move forward with three projects on the East Coast.
“Fundamentally, US offshore wind is broken,” the company’s former renewables director Anja-Isabel Dotzenrath, who left BP in April, said last November.
BP’s new gas and low-carbon division chief William Lin said on Monday that the onshore wind business is “not aligned with our growth plans at Lightsource BP” and the company will continue to “simplify our portfolio and focus on value.”
The oil company has been refocusing on its core oil and gas business since Murray Auchincloss was appointed chief executive in January. Analysts expect BP to abandon a commitment to cut its oil and gas output to 2 million barrels a day by 2030.
BP’s share price has fallen more than 20 percent in the past 12 months on fears it will cut its profit forecasts and have to reduce its distributions to shareholders.
“BP’s $7 billion annual buyback program does not appear to be covered from 2025 onwards,” said Kim Fustier of HSBC. in a note last month when the bank downgraded the company.
The wind farms, spread across seven states, are all operational and have a combined capacity of 1.7 GW, of which BP owns 1.3 GW. Analysts at RBC Capital Markets said they could be worth more than $2 billion.
“This is another indication that BP is streamlining its energy transition strategy, and there are likely interested buyers for these assets that would be worth more than the stock implies, which is likely close to zero,” said Biraj Borkhataria, an analyst at RBC.
BP has an additional 12.7 GW of onshore wind portfolio globally, but would not comment on what would happen to potential projects in the United States. A person close to the company said the sale was of BP’s entire onshore wind business.
Oil doesn’t break down Last year, solar was competing with wind as the largest source of renewable electricity generation on the U.S. grid. BloombergNEF expects solar to grow nearly threefold. As much solar capacity as wind will be installed in the U.S. between 2024 and 2035, with a total of 737 GW of new solar projects and 199 GW of new wind projects.
Solar is the cheapest form of generation and faces fewer hurdles in permitting, grid connection and supply chain restrictions.
The US is widely expected to miss its 30GW offshore wind target by 2030 after high interest rates and supply chain issues forced developers to cancel about a third of previously planned projects.
President Joe Biden’s Inflation Reduction Act offers lucrative 10-year tax credits to lower the cost of deploying wind power and attract local manufacturing.
Onshore wind installations have nonetheless been down, falling 26 percent in 2023 compared to the previous year, and wind turbine manufacturers such as Siemens Gamesa, Vestas and GE Vernova continued to report losses in their wind power segments.
Wind power accounted for 10 percent of U.S. power generation last year compared with 4 percent for solar power, according to the U.S. Energy Information Administration.
Meanwhile, BP also made a $1 billion deal with Apollo Global Management for a stake in the Trans Adriatic pipeline on Monday. The size of the stake was not disclosed, but BP owned 20 percent of the pipeline and Apollo said it would not have a controlling stake. The pipeline runs from the Greek border with Turkey to southern Italy, and is part of a network that brings gas from Azerbaijan to Europe.
