BP is the latest oil company to invest in renewables with the company opting for an offshore wind project, which was part of Norway’s Equinor. BP stated that it is investing in half of the Empire Wind project’s shares and another half in the Beacon Wind development project. Nevertheless, Equionr will retain the other halves and continue running the projects until the agreement states otherwise.
BP’s chief executive Bernard Looney stated that they would be milking the oil and gas energy projects to feed the renewable energy investments until they finally witness a full transition of the economy to renewables. Currently, BP has a potential of 2.4 GW in renewable energy investments, a value that the firm anticipates to increase 50 GW before the decade ends.
Looney stated that they could not afford to miss this rare opportunity of investing with an offshore wind developer whose success is visible in its growing global market share. Equinor’s chief executive Eldar Saetre admitted his vitality to work with BP, who also has an ambitious and calculated view of a future that depends on renewables. He added that their partnership would help actualize the success of offshore wind projects in the United States.
Equinor stated that they must invest at least $3 billion in the Empire Wind project to complete its construction and begin harnessing renewable energy. On the other hand, the Beacon Wind program will generate over 2 GW of power once it becomes operational.
Equinor explained its move of selling half of its shares to BP as a strategy to gain support and access to economies of scale, finalize the incomplete projects, and to garner high capital through ownership agreements. BP and Equinor publicly announced their intention of developing other energy projects to realize a renewable energy potential exceeding 600 GW.
ESG’s veteran analyst, John Miller, explained many hindrances for companies to venture offshore wind projects, and only partnerships between giant energy companies can achieve the shift to these projects. This move is plausible because giant energy companies have economies of scale. These companies have a vast knowledge of overcoming economic barriers and maneuver through tough economic times efficiently.
Finally, energy experts argue that the fastest way for oil and gas companies to enter the renewable energy systems is through acquisition. This move can help these firms to invest their resources wisely in the projects. Experts explained that huge companies enjoy economies of scale and can predict the renewable energy industry; hence amalgamation with other renewable energy companies suits them efficiently.