BP puts $2 billion worth of businesses up for sale

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BP has put bp Wind Energy, its US onshore wind business, up for sale for an estimated $2 billion as it cuts its renewables business and sells underperforming assets.

The UK-listed oil company said it will permanently sell the nine wind farms it owns and its one-tenth stake in Hawaii to focus on Lightsource bp, the solar business it is in the process of buying.

BP also slashed the value of its US offshore wind business by $1.1 billion last year as it struggled to make progress on three East Coast projects.

“Finally, US offshore wind is fundamentally broken,” the company’s former head of renewables, Anja-Isabel Dotzenrath, said last November. She left BP in April.

The new head of gas and low carbon, William Lin, said on Monday that BP’s onshore wind business “is not aligned with our growth plans in Lightsource bp” and that the company would continue to “simplify our portfolio and focus on value”.

The oil major has refocused on its core oil and gas business since Murray Auchincloss was appointed chief executive in January. Analysts expect BP to abandon its commitment to cut oil and gas production to 2 million barrels per day (b/d) by 2030.

BP’s share price has fallen more than 20% in the past 12 months on fears it will cut its earnings guidance and have to cut distributions to shareholders.

“BP’s $7 billion annual buyback 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 it could be worth more than $2 billion.

“This is another signal that BP is streamlining its energy transition strategy and there are probably willing buyers for these assets that would be worth more than what is implied in the shares, which is probably close to zero,” said Biraj Borkhataria, an analyst. at RBC.

BP has a pipeline of another 12.7 GW of onshore wind power globally, but did not comment on what would happen to any of the potential US projects. A person close to the company said the sale was for BP’s “entire onshore wind business”.

The oil company does not share revenue from its onshore wind business, but its gas and renewables arm posted a replacement cost profit of $8.7 billion last year.

Solar is now challenging wind as the largest source of renewable energy generation on the US grid. BloombergNEF expects the U.S. to install nearly three times as much solar capacity as wind between 2024 and 2035, totaling 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 terms of permitting, grid connection and supply chain constraints.

The US is expected to miss the 30 GW offshore wind target for 2030 after high interest rates and supply chain crises forced developers to cancel about a third of previously planned projects.

President Joe Biden’s landmark inflation relief act offers lucrative 10-year tax credits to lower the cost of wind deployment and attract local production.

However, onshore wind installations slowed, falling 26% in 2023 compared to the previous year, and wind turbine makers including Siemens Gamesa, Vestas and GE Vernova continued to report losses in their wind segments.

Wind accounted for 10 percent of U.S. power generation last year, compared with 4 percent for solar, according to the U.S. Energy Information Administration.