UK oil firm BP has entered the offshore wind market through a partnership in the US with Norway’s Equinor. It will pay Equinor US$1.1 billion for interests in the existing US offshore developments and to form strategic partnership to pursue other offshore opportunities together in the fast-growing US market
It is BP’s first offshore wind venture and an important step towards its aim of having developed 50GW of renewable power by 2030.
Bernard Looney, BP’s CEO, said: “This is an important early step in the delivery of our new strategy and our pivot to truly becoming an integrated energy company. Offshore wind is growing at around 20% a year globally and is recognised as being a core part of meeting the world’s need to limit emissions. Equinor is a recognised sector leader and this partnership builds on a long history between our two companies. It will play a vital role in allowing us to deliver our aim of rapidly scaling up our renewable energy capacity, and in doing so help deliver the energy the world wants and needs.”
As well as forming the new strategic partnership, BP will purchase a 50% interest in both the Empire Wind and Beacon Wind assets from Equinor at US$1.1 billion.
The partnership will leverage capability and experience from both companies. Equinor will remain operator of the Empire and Beacon projects in the development, construction and operations phases. The deputy project director for Empire Wind will be nominated by bp and over time the wind assets will be equally staffed by BP and Equinor.
The agreement comes a month after BP announced its new strategy, including aims to increase its annual low carbon investment ten-fold to around US$5 billion a year and grow its developed renewable generating capacity from 2.5 gigawatts (GW) in 2019 to around 50GW by 2030.
The Empire Wind lease area, which was awarded to Equinor in 2016, is 15-30 miles southeast of Long Island and has a total area of 80,000 acres. The area will be developed in two phases. Empire Wind phase 1 secured an offtake agreement in the July 2019 solicitation and will have between 60 and 80 turbines. The whole Empire Wind lease area has a potential generation capacity of 2GW with a generating capacity of more than one million homes.
Beacon Wind covers a total area of 128,000 acres of federal waters off New England’s coast, approximately 20 miles south of Nantucket and 60 miles east of Montauk Point. When fully developed it is expected to have a total generating capacity of 2.4GW, sufficient to provide power to more than a million households in the Northeast US.
First power from Empire Wind’s phase 1 is expected in the mid-2020s and phase 2 is preparing for upcoming solicitations. Beacon Wind will also be developed for future solicitation opportunities and will begin a review process to secure all necessary permits for the project.
Subject to customary regulatory and other approvals, the deal is expected to close in early 2021.
BP and Equinor will jointly develop four assets in two existing offshore wind leases located offshore New York and Massachusetts that together have the potential to generate power for more than 2 million homes.