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BP plc BP, the UK-based energy major, is looking to sell a 50% stake in its solar unit, Lightsource BP, as part of a broader effort to cut costs, improve returns and address investor concerns. The energy major is seeking a strategic partner that will provide cash and commit to future investments, with initial bids due in June, according to a report by Reuters.
BP, which took full control of Lightsource BP last October for £400 million plus £2.1 billion in debt, is now looking to partially divest the unit. The initiative, called Project Scala, is aimed at securing a partner with deep expertise in renewable energy. The governance structure of the partnership would reflect joint control over Lightsource BP’s assets.
The move aligns with BP’s recent strategy shift under CEO Murray Auchincloss, who has emphasized the need to increase returns from its renewable business. In February, Auchincloss confirmed that BP had been exploring partnerships to optimize Lightsource BP’s performance. The platform currently operates 5.7 gigawatts of assets across 19 markets, with more than 2 GW of new projects completed in 2024. It is also expanding into battery storage and onshore wind.
BP has been under increasing pressure from investors, particularly activist fund Elliott Management, which has built a 5% stake in the company in recent months. Elliott has pushed BP to scale back its green energy investments and focus on more profitable ventures, including oil and gas.
In response, BP announced last month that it would cut renewable energy investments while increasing annual oil and gas spending to $10 billion. The company is also reviewing its lubricants business, Castrol, and targeting $20 billion in divestments by 2027.
BP’s sales document outlines an ambitious expansion strategy for Lightsource BP, targeting 3 to 5 GW of annual capacity additions. A new investor could provide access to specific markets, such as India, where solar demand is surging. Additionally, the company may take on a "prudent" level of debt to support future growth.
BP declined to provide further details but confirmed its intention to bring in a strategic partner for Lightsource BP and launch the sales process soon. Non-binding offers are due in June, with shortlisted bidders expected in July.
This partial divestment highlights BP’s effort to balance its renewable ambitions with financial discipline as it navigates investor expectations and shifting market dynamics.
BP’s Zacks Rank & Key Picks
BP currently carries a Zack Rank #3 (Hold).