BP reached an agreement to purchase 9 gigawatts (GW) of solar development projects in the U.S. from independent solar developer 7X Energy. The acquisition represents a significant step towards BP’s target of growing its net developed renewable generating capacity to 20GW by 2025 and aim to bump up to 50GW by 2030.
The deal will also grow BP’s renewables pipeline from 14GW to 23GW. The assets will be developed through bp’s 50-50 solar joint venture Lightsource bp, a global leader in solar energy, applying Lightsource bp’s capabilities to accelerate bp’s renewables targets.
BP will pay 7X Energy $220 million for the projects and 1GW of “safe harbour” equipment and expects the acquisition to complete in 30 days. The projects are expected to meet BP’s disciplined low carbon investment criteria, generating returns of at least 8-10%.
“With this purchase, we are continuing to put our strategy in action as we grow our renewables business in a deliberate and disciplined way,” said Dev Sanyal, BP executive vice president of gas and low carbon energy. “It brings us 9GW of high-quality solar projects in markets where we can create integrated renewable energy offers through our trading and customer franchises.”
Sanyal added that the company will bring the industry-leading expertise of Lightsource BP together with the breadth of BP’s integration capabilities in the U.S. to develop the portfolio of projects. “This is a significant step as we continue to deliver on our net zero ambition,” he said.
“BP’s new high-quality solar portfolio will provide low carbon energy, create U.S. jobs and deliver the competitive returns our shareholders expect,” said BP America Chairman and President Dave Lawler. “In line with our strategy, we’ll aim to integrate these projects with our existing onshore and offshore wind, natural gas, and trading and shipping businesses to give customers what they want – reliable, affordable and clean energy.”
Solar energy is the fastest growing power source in the U.S. and is expected to quadruple over the next 10 years. It currently accounts for more than 40% of all new electricity generating capacity added in the U.S.
The projects are spread across 12 U.S. states, with the largest portfolios in Texas (ERCOT) and the Midwest (PJM). Assets with a combined generating capacity of 2.2GW are expected to reach final investment decision by 2025, with the remaining progressing by 2030.
Once developed, the projects will have the capacity to generate enough clean energy to power around 1.7 million U.S. homes. The development is also expected to support thousands of jobs through construction.
As an integrated energy company, BP is able to combine its trading, mobility and customer expertise with Lightsource bp’s world-class solar project development experience and execution capabilities.
“This transaction speaks volumes about the success of our joint venture with BP, and how we leverage each other’s strengths to realize our ambitions for solar and a low-carbon future,” said Lightsource BP Group CEO Nick Boyle “It also positions Lightsource BP as a growing force in the U.S. solar market, as we expand our portfolio across the United States.”