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BP plc BP, the British oil and gas giant, continues to scale down the expansion of its renewables business, bringing its focus back to fossil fuels. According to sources familiar with the matter, the company wants to sell off a minority stake in its offshore wind business.
Per Reuters, BP has appointed Bank of America to search for partners to invest in its offshore wind business. Renewable projects like offshore wind farms generally require huge capital investments, and BP plans to reduce its share of the significant investment associated with the development of such projects.
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The British energy firm is committed to investing in its major offshore wind projects, along with its solar, biofuels and low-carbon hydrogen projects. BP’s CEO Auchincloss, who assumed office in January this year, has mentioned that the company will focus on its high-margin businesses instead of aggressively cutting down on emissions. BP remains committed to its target of achieving net zero carbon emissions by 2050. The company’s energy transition plans to expand its renewables business and reduce oil and gas production faced heavy investor scrutiny since their launch in 2020. This strategy had a negative effect on BP as the profits from renewables declined and those associated with its oil and gas business rose higher.
Amid this strategic shift, BP has chosen to discontinue investments in new offshore wind projects. Furthermore, the company intends to divest its U.S. onshore wind business, per a Reuters report. BP owns interests in several offshore wind projects in regions like Britain, Germany, the United States and Asia. However, the company does not have any operational offshore wind farm at present. It had a substantial project pipeline in the offshore wind segment that added up to a total capacity of 9.6 gigawatts as of June-end 2024.
Challenges in the Offshore Wind Segment
The offshore wind sector has been facing significant challenges in recent years, causing several companies to reconsider their investments in the same. The cost of developing these projects skyrocketed due to technical complexities and supply-chain issues. Moreover, higher interest rates made it expensive for companies to finance such projects on a large scale. BP is also one of the energy giants reviewing its investments in this sector. As per the annual report, BP incurred a significant impairment charge over its U.S. offshore wind projects in the past year. Later on, the company terminated a U.S. offshore wind joint venture that it was involved in with Equinor.