BP will pay $220 million for the U.S. projects and 1 gigawatt of “safe harbor” equipment eligible for tax credits, with the deal expected to complete in 30 days. The assets, which are not currently generating solar power, boost BP’s total pipeline of renewables projects to 23 gigawatts.
The transaction “represents a major statement for the company’s accelerating energy-transition strategy, in our view, alongside a 40% decline in oil and gas volume by 2030,” according to Will Hares, a Bloomberg Intelligence analyst.
BP expects to generate at least 8% to 10% returns from the projects, although “the market is definitely becoming more competitive, the market is also growing” Sanyal said. But as an integrated energy company, BP can still meet its return threshold thanks to its extensive customer base, it’s operating experience and trading capabilities, he said.
While BP also announced its entry into the Greek solar market on Monday, it is “not looking to place a flag on every mountain,” Sanyal says. The U.S. is an important, growing market for BP, but it will continue to look at other parts of the world for potential assets.
The U.S. and Greek assets will be run by its joint venture partner Lightsource BP, in which the major has a 50% stake.