BP Enters Offshore Wind Through $1.1 Billion Acquisition of US Assets

BP Plc agreed on Sept. 10 to pay $1.1 billion for interests in existing U.S. offshore wind developments from Norway’s Equinor ASA.

The acquisition marks BP’s entry into offshore wind and follows a new strategy that sees the British oil major accelerating its shift away from fossil fuels to achieve its ambitions of net-zero emissions by 2050.

“This is an important early step in the delivery of our new strategy and our pivot to truly becoming an integrated energy company,” BP CEO Bernard Looney said in a statement on Sept. 10. “Offshore wind is growing at around 20% a year globally and is recognized as being a core part of meeting the world’s need to limit emissions.”

BP, which already has a large onshore wind business in the U.S., set a target roughly a month ago to increase its renewable power generation capacity 20 fold over the coming decade to 50 gigawatts (GW). The target is a part of plans unveiled earlier this year by Looney to reinvent the roughly 111-year-old company by increasing its investment in renewables.

The acquisition on Sept. 10 comprises a 50% interest in both the Empire Wind and Beacon Wind assets located on the U.S. East Coast. Additionally, BP and Equinor formed a new strategic partnership to jointly develop offshore wind projects including existing assets and future opportunities in the U.S., according to the company release.

In a statement commenting on the partnership with BP, Equinor CEO Eldar Sætre said: “We look forward to working with BP who share our strong ambition to grow in renewable energy. Our partnership underlines both companies’ strong commitment to accelerate the energy transition and combining our strengths will enable us to grow a profitable offshore wind business together in the U.S.”

As part of the agreement, 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 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.

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.

Empire Wind will be developed in two phases. Phase 1 secured an offtake agreement in the July 2019 solicitation and will have between 60 and 80 turbines. First power from Empire Wind’s phase 1 is expected in the mid-2020s and phase 2 is preparing for upcoming solicitations. 

The whole Empire Wind lease area has a potential generation capacity of 2 GW. Meanwhile, Beacon Wind is expected to have a total generating capacity of 2.4 GW. Combined, the two projects have potential of providing power to roughly two million homes when fully developed.

BP’s acquisition of the interests in Empire Wind and Beacon Wind has an effective date of Jan. 1, 2020. The transaction is expected to close in early 2021, subject to customary conditions including purchase price adjustments and authority approval.

J.P. Morgan Securities Plc was financial adviser to BP for the transaction. Law firm Bracewell LLP advised Equinor on the deal.