BP ‘looking to buy remaining 50%’ in Lightsource joint venture

London — BP is considering buying the remaining 50% stake in Lightsource BP (LSBP), its solar power joint venture, as part of the British giant’s drive to build up its renewable-energy capacity, three industry and company sources said on Thursday.

The internal talks come after CEO Bernard Looney in February slowed down BP’s shift away from oil and gas but still vowed to increase spending on renewables and low-carbon fuels by $8bn by 2030.

BP acquired a 43% stake in Lightsource for $200m in 2017 and increased its interest to 50% two years later.

A deal would value LSBP’s portfolio at about $2bn, though the final price tag could be much higher, depending on the valuation of its long-term business, two of the sources said.

“The number is in the eye of the beholder,” said one source close to the talks. “So much depends on what you believe the future of the solar power sector to be.”

A BP spokesperson declined to comment. LSBP also declined to comment.

London-based LSBP was founded in 2010 by CEO Nick Boyle, who holds the majority of the outstanding 50% stake, and is today one of the world’s top developers of solar photovoltaic projects.

It has developed about 9GW of projects and has operations in 19 countries. It planned to develop 25GW of solar projects by 2025, Boyle said in October 2022.

LSBP remains in a large investment phase and as a result it reported at the end of 2021 a total loss of £173m, compared with a loss of £22.3m a year earlier, according to its latest filing.

Soaring costs

BP also develops solar projects independently of LSBP, including in the US, where in 2021 it acquired 9GW of solar projects from 7X Energy.

The energy giant considered increasing its stake in LSBP to 80% in 2019 under the terms of the two companies’ contract, but opted for a modest increase to 50%, partly due to cost considerations, according to one source.

Acquiring control of LSBP would allow BP to grow its access to renewable power generation, simplify decision-making on projects and investments, and combine it with its in-house solar production, the sources said.

But soaring raw-material and transportation costs in the wake of the Covid-19 pandemic have put pressure on the profitability of renewables projects over the past year.

The internal discussions come as BP’s head of renewables and natural gas, Anja-Isabel Dotzenrath, carries out a review of BP’s solar and onshore wind business after a shake-up of the offshore wind and hydrogen divisions in recent months.

BP has shifted its renewables strategy since Dotzenrath, the former CEO of RWE Renewables, took office in 2022. It now aims to use most of the solar and wind power it generates to produce hydrogen and biofuel as well as to power its global electric vehicle charging network.

Solar, including BP’s share in LSBP, accounted for 25.7GW of BP’s total renewables project pipeline of 43GW at the end of 2022, according to its annual results. The company aims to grow its renewables capacity to 50GW by 2030.

Reuters