BP will invest $220m to acquire nine gigawatts (GW) of solar power projects in the US from developer 7X Energy, as it continues to diversify its energy portfolio towards a greater share of renewable capacity.
The assets – which are spread across 12 US states with the largest based in Texas and the Midwest – will be developed by the energy giant’s 50/50 solar joint venture Lightsource BP, with all projects expected to be operational by 2030.
It is BP’s first independent investment into solar energy since it took a stake in Lightsource in 2017. The transaction is expected to be complete within 30 days.
The UK-based oil major is advancing a major strategic transformation to decarbonise its energy portfolio and steer towards net-zero emissions by 2050 – planning to spend $5bn over the next decade to develop 50GW of renewable capacity while reducing its oil and gas production by 40%.
Dev Sanyal, BP’s executive vice president of gas and low-carbon energy, said: “With this purchase, we are continuing to put our strategy in action as we grow our renewables business in a deliberate and disciplined way.
“It brings us nine GW of high-quality solar projects in markets where we can create integrated renewable energy offers through our trading and customer franchises.”
US solar power acquisition grows BP renewables pipeline to 23GW
Once finalised, the acquisition will grow BP’s pipeline of renewable energy projects from 14GW to 23GW, marking its largest foray into renewable energy yet in terms of capacity added.
Last year, the company entered the US offshore wind market with a $1.1bn acquisition of a 50% interest in two East Coast ventures being developed by Norway’s Equinor, which will have a combined generating capacity of 4.4GW once complete.
BP said the new solar assets are expected to generate returns of at least 8-10%, the criteria it has set for making new investments into renewable energy projects.
Solar power is a significant, growing market in the US, currently accounting for more than 40% of all new generation capacity added in the country and expected to quadruple over the next ten years, according to BP.
Lightsource BP’s group chief executive Nick Boyle said the transaction will position his company as a “growing force” in the US solar market as it continues to expand its presence across the country.