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Friday, February 23, 2024

BP plans $8 billion investment in alternative energy sources

LONDON: Oil major BP Plc. is investing up to $8 billion in wind, solar, hydrogen and high efficiency gas-fired power generation projects in the next 10 years as part of its efforts to reduce the ill effects of global warming.

The London-based company, the world’s second largest listed oil firm, said it is setting up a new unit, BP Alternative Energy, to manage a number of projects that have potential to turn in sales of around $6 billion a year in about 10 years. It is earmarking an initial $1.8 billion as investment in the sector over the next three years — in solar, wind, hydrogen and combined cycle gas turbines. Most of the projects will be located in the U.S.

BP’s chief executive Lord John Browne said there are sufficient new technologies and sound commercial opportunities within the company’s reach to build a significant and sustainable business in alternative and renewable energy.

He said the planned investment, which is double its existing spending on the business, intends to set up new low-carbon power business with potential to generate around $6 billion.

The company foresees a 30 per cent rise a year in demand for solar energy-based systems.

All said and done, a vast majority of the oil major’s around $15 billion annual investment budget will continue to support oil and gas projects.

The shift in the company’s investment strategy is at variance with that of other major oil companies, including Exxon Mobil, which has said renewables are a poor use of investors’ funds.

BP has already identified sites in the U.S. to locate wind turbines with a total capacity of 2,000 megawatts. It is also finalising plans to invest $400 million at one of its CCGT plants in the U.S.

BP has its solar panel business, which is second to Japan’s Sharp and Kyocera. It has two wind farms in continental Europe and it plans to develop many more on BP property, especially in the U.S. where it has a string of plants in the mid-west’s “wind belt”.

In hydrogen, the company will build the world’s first gas power plant in Peterhead, Scotland, where carbon is separated and buried under ground. It also is also developing hydrogen as a fuel for cars and buses.

The company said gas power was included as an alternative energy plan because modern combined-cycle-gas-turbine plants are about twice as clean as conventional coal-fired power stations.

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