BP boosted its investment in U.S. solar projects last Tuesday to expand the firm’s product range. This comes as fuel suppliers are being urged closer and closer to the inevitable all-electric future of our planet, and the change is beginning to occur. BP has announced its first green deal including assets with a production capacity of 9 gigawatts, the deal marks BP's first independent investment in solar since buying a stake in Europe's largest solar developer, Lightsource, in 2017. BP said the new assets will be developed and operated through its 50-50 joint venture with Lightsource BP. The deal will grow BP's renewables pipeline from 14GW to 23GW. The company expects to start developing around 2.2 GW of the acquisition's pipeline by 2025, an optimistic milestone in many regards.
BP is a monumental provider of fossil fuels, oil specifically, which, in future, will see decreased demand as global economies, especially the UK, move towards being carbon neutral. This comes concurring with the Paris agreement of 2019 which saw the banning of all petrol and diesel cars from the nations who signed the treaty by 2050, thus slowly decreasing the overall oil demand.
America is also looking to decrease its carbon emissions, as Joe Biden has pledged a green energy deal, which the BSE has covered before Available at:
This includes the removal of old oil pipelines and services and promotes new initiatives for electric charging stations too, at the expense of the business owners and profiteers.
The green deal is predicted to make 10 million jobs, as part of the $2.3tn infrastructure package. This job creation will likely help BP set up in America, as the development of a specialised area within America with more available green energy will allow BP to set up near other private firms that specialise in solar energy, helping to reduce costs as the proximity near firms decreases transport times, thus aiding their transition to renewables and shift to the electric future.
This also helps America create a new specialised industry in green energy, incentivising a first-mover advantage as firms now set up in America as one of the first economies to establish the foundations for a sustainable way of life. BP will integrate the new solar output into its large U.S. power trading business, which includes onshore wind and natural gas electricity. In future, it will also have offshore wind from a project it is developing off the East Coast with Norway's Equinor (EQNR.OL), Dev Sanyal, BP head of gas and low carbon energy, told Reuters.
Not only does this encourage sustainable economic growth as part of a macroeconomic objective, but this will also attract FDI from overseas and therefore encourage job multiplier effects. Fewer unemployment results in more income tax for the US government, and also allows an increased spending power, encouraging businesses investments furthermore, also creating more tax revenue in the form of ad valorem taxation.
BP is confident it can reach returns on investment of 8% to 10% on its renewable investments, Sanyal added. This, therefore, paves a way for other oil/gas/coal producers/manufacturers that renewables do not have to take up whole operating budgets and can make just as much return if not more with increasing demand as traditional energy. "This acquisition gives us a very significant development pipeline in one of the most important markets," Sanyal said. The projects acquired are spread across 12 U.S. states, with the largest portfolios in Texas and the Midwest. This will therefore boost these areas and once more create jobs too.
Overall, the investments by BP are very significant, in the fight against climate change and also for a sustainable future as part of the USA’s packages. This, therefore, creates a marker for the world stage to follow and also pay attention to for other producers to shift to a cleaner future more quickly making sure the world is on the cleaner path for a better future.
Written By Euan Taylor