BP is offloading its onshore wind business in the US, valued at approximately $2 billion, as part of a broader strategy to streamline its renewables sector and divest from less profitable assets. The company plans to sell nine wind farms it fully owns and its stake in a tenth in Hawaii. This move aligns with BP’s renewed focus on Lightsource bp, its solar energy division currently in the process of being acquired.
The decision to sell follows a significant write-down of $1.1 billion on its offshore US wind projects last year, a result of difficulties in advancing three east coast projects. Former renewables chief Anja-Isabel Dotzenrath, who left BP in April, criticized the US offshore wind sector as fundamentally flawed. William Lin, BP’s new head of gas and low carbon, noted that the onshore wind business does not fit with BP’s growth plans for Lightsource bp and that the company aims to simplify its portfolio while concentrating on value.
Under CEO Murray Auchincloss, appointed in January, BP has shifted its focus back to core oil and gas operations. Analysts predict BP might abandon its target to cut oil and gas output to 2 million barrels per day by 2030. BP’s stock has dropped more than 20% over the past year amid concerns about potential cuts to earnings guidance and shareholder payouts. HSBC’s Kim Fustier has warned that BP’s $7 billion annual share buybacks might not be sustainable beyond 2025.
The wind farms in question, spread across seven states with a total capacity of 1.7 GW, are operational, and BP owns 1.3 GW of this capacity. Analysts estimate the assets could fetch over $2 billion. RBC Capital Markets’ Biraj Borkhataria views the sale as indicative of BP rationalizing its energy transition strategy, noting that there are likely buyers who would value the assets higher than BP’s share price suggests.
BP also has a global pipeline of 12.7 GW in onshore wind projects, but it has not clarified the fate of US-based prospective projects. The company’s gas and renewables segment earned a replacement cost profit of $8.7 billion last year, though specific earnings from the onshore wind business are not detailed.
In related news, BP recently struck a $1 billion deal with Apollo Global Management for a stake in the Trans Adriatic Pipeline, which transports gas from Azerbaijan to Europe. BP’s previous 20% stake will be reduced, with Apollo acquiring a non-controlling share. This pipeline is a key part of the network connecting Greek and Turkish borders to southern Italy.