Oil giant BP (LON: BP) has announced its intention to divest its entire US onshore wind energy portfolio. This decision, which puts assets valued at approximately $2 billion on the market, marks a significant pivot in BP’s green energy strategy and reflects broader changes in the renewable energy landscape.
The sale encompasses nine wholly-owned wind farms and a stake in a tenth Hawaiian facility, with a combined capacity of 1.7 gigawatts (GW). This exit from the US wind market comes at a time when the industry faces mounting challenges, including supply chain disruptions, rising interest rates, and fierce competition from solar energy.
William Lin, BP’s executive vice president for gas and low-carbon energy, said the company believes the wind energy assets are “likely to be of greater value for another owner.”
Industry analysts point to several factors driving BP’s decision. Solar power is increasingly outpacing wind in terms of new installations and cost-effectiveness. BloombergNEF projections indicate that solar capacity additions in the US will outstrip wind by nearly 3:1 between 2024 and 2035.
The wind sector faces significant headwinds, as evidenced by a 26% drop in onshore wind installations in the US in 2023, while major turbine manufacturers continue to grapple with financial losses in their wind divisions.
Offshore wind has also encountered setbacks, highlighted by BP’s $1.1 billion write-down of its US offshore wind business last year, reflecting broader struggles that may prevent the US from meeting its 30GW offshore wind target for 2030.
Under new CEO Murray Auchincloss, BP is undergoing a strategic refocus, streamlining its portfolio and potentially reconsidering its commitment to reduce oil and gas output to 2 million barrels per day by 2030. Simultaneously, BP is doubling down on solar energy through its acquisition of Lightsource bp, Europe’s largest solar developer, indicating a shift in its renewable energy strategy.
This shift occurs against a backdrop of policy support for renewables, including the Biden administration’s Inflation Reduction Act, which offers substantial tax incentives for clean energy projects. However, these incentives have not been enough to overcome the headwinds facing the wind sector.
BP’s move may also signal a broader trend of oil majors reassessing their renewable portfolios. As the energy transition accelerates, companies are being forced to make tough choices about which technologies to back and where to allocate capital.
Information for this story was found via Reuters, Financial Times, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
