Photographer: Andrew Caballero-Reynolds/Bloomberg
Oil major buys stake in U.K. photovoltaic firm Lightsource
Move is less adventurous than investments by Shell and Total
After a six year absence, BP Plc returned to the solar-energy business with a $200 million investment in a British company that develops and maintains photovoltaic farms in Europe.
The move marks another step by the largest oil companies into renewable-energy technologies starting to disrupt the energy industry. BP’s rivals such as Royal Dutch Shell Plc and Total SA have made bigger ventures into offshore wind and solar-panel production in the past few years, reflecting a shift by governments to encourage cleaner forms of energy.
BP’s purchase of a 43 percent stake in Lightsource Renewable Energy Ltd., a leading developer of renewables in Europe, is a step into managing and maintaining solar farms. That contrasts with its earlier ventures that BP closed in 2011, which involved making panels and other renewables. The oil company said it’s taking a quieter approach to new energy technologies than it has in the past.
“While our history in the solar industry was centered on manufacturing panels, Lightsource BP will instead grow value through developing and managing major solar projects around the world,” Chief Executive Officer Bob Dudley said in the statement. “The combination of Lightsource’s expertise and experience with BP’s relationships and resources will propel this innovative business to even more rapid growth.”
While oil companies dabbled in renewables after the 1970s oil shocks, most left the business in the 1980s when crude prices plunged. BP broke with the rest of the industry in 1997 when then CEO John Browne became the first leader of a oil major company to acknowledge that climate change is a risk and the industry should take steps to respond. BP built a wind and solar business, briefly branding itself as “Beyond Petroleum.”
A major oil spill on BP’s Macondo prospect in the Gulf of Mexico in 2010 forced the company to slash costs, leading to the closure of its solar business the next year. In 2012, the oil and gas giant canceled a $300 million project in the U.S. to produce the transport fuel ethanol from non-food crops. A year earlier, it shut down its solar manufacturing unit as panel prices slumped amid competition from Chinese manufacturers.
While BP and most other oil companies have built biofuels businesses to produce cleaner fuels, others have been more adventurous than BP in investing in renewables. Total took a majority stake in the California solar panel maker SunPower Corp., and Shell has made major investments in hydrogen fuel cells and offshore wind farms.
The Lightsource deal is a “relatively cheap” way for BP to get involved in solar, said Jenny Chase, head of solar analysis for Bloomberg New Energy Finance. “Sometimes I think these big firms just make investments because they are curious and cannot see many other investment options.”
BP will now make smaller bets on renewable energy, including research on gasoline that helps engines operate more efficiently, new chemical-manufacturing processes that produce fewer emissions and producing more biofuels and biogas, Dudley said in October. Lightsource also plans to develop energy storage technology in the form of a battery in the U.K., a measure that would help its solar farms feed the grid after the sun sets.
Lightsource plans to “piggy back” on BP’s existing relationships with governments and businesses that it doesn’t yet operate in to expand its development pipeline, Lightsource CEO Nick Boyle said in an interview.
Lightsource has commissioned 1.3 gigawatts of solar capacity and manages another 2 gigawatts under long-term contracts -- enough to power over half a million homes, according to the statement. BP will have two seats on the company’s board of directors.