BP Plc will invest almost $2 billion this year in alternative energy, more than the London-based oil company has previously stated, said Katrina Landis, chief executive of the company’s low-carbon unit.
BP had pledged to invest $8 billion over 10 years when it started its BP Alternative Energy plan in 2005, an average of $800 million a year. By the end of last year, it had invested $5 billion, Landis said at a conference in New York today.
“We have many interesting opportunities to continue the development of those businesses which will take us well beyond that $8 billion in 10 years,” Landis said.
Biofuels will have a “tremendous opportunity” to expand in the next decade, and the company also is building businesses in wind and solar energy. Landis said she’s also interested in battery technology.
“Provided that we continue bringing forward projects that meet our return criteria, we will continue to invest,” she said.
Landis urged U.S. government officials to make clear what incentives will be available for renewable energy after tax credits expire in 2012.
“Industry pauses and says what are the rules of the game going to be beyond that time,” she said. “You’re not going to invest large amounts of capital without understanding the return you’re going to get.”
The company had waited on some of its European solar projects until incentive policy became clear, Landis said in an interview at the conference. That included 50 megawatts of solar projects in Italy. The Italian government is curbing subsidies to undercut a boom in the industry and plans to issue new targets and reduce incentive rates from June.
The company is also unlikely to develop large solar projects in the U.K. after the Conservative-led government proposed cuts in above-market prices paid for solar projects that targeted bigger reductions at larger plants, Landis said.
“I’m not sure then there is sufficient profit left for the larger installations to attract companies like BP,” she said.
BP developed a number of projects in Spain last year that became subject to cuts to the so-called feed-in tariff in that country, Landis said. “That’s a really difficult proposition for a business, when you actually put capital on the ground and suddenly all the rules change.”