BP shifts offshore wind to joint venture amid retreat from renewables | Wind power

BP has agreed a deal worth up to £4.5bn to build offshore windfarms with Japan’s biggest power producer, in a shift that will allow it to gain some access to zero-carbon wind energy while focusing on fossil fuels.

The FTSE 100 company will create a 50-50 joint-venture with the Japanese power generator Jera to combine their offshore wind assets, the companies announced on Monday.

Oil companies are under pressure to show plans for the transition away from polluting fossil fuels, as renewables such as wind and solar are expected to take up a fast-growing share of global energy use.

The International Energy Agency has said that no new fossil fuel projects should be approved if the world is to meet targets to limit carbon pollution and global heating. However, some shareholders are pushing the other way, encouraging oil companies to focus on their strongest suit of producing profitable oil and gas.

BP has faced strong criticism for watering down carbon reduction targets, and has backtracked on plans to curb fossil fuel exploration and production under Murray Auchincloss. He was made permanent chief executive in January, after the shock departure of his predecessor, Bernard Looney, because of undisclosed sexual relationships with colleagues.

In June, Auchincloss imposed a hiring freeze and halted new offshore wind projects in a move Greenpeace UK described as “disappointing but sadly unsurprising”.

The joint-venture with Jera will combine the Japanese company’s existing windfarms, capable of generating about a gigawatt (GW) of power, with the projects in development from both companies.

BP has no windfarms yet generating power, but has prospects to generate as much as 10 GW, including two offshore projects apiece in Germany and the UK. Other prospects include the US Beacon project, which ran into trouble amid turmoil caused by rising materials prices and a backlog of projects.

Auchincloss said the joint-venture would create “a top five wind developer globally” while limiting the amount of money requested from shareholders. The joint-venture will seek to raise funding itself, separate from BP’s balance sheet.

“This will be a very strong vehicle to grow into an electrifying world, while maintaining a capital-light model for our shareholders,” Auchincloss said.

BP has said it will spend up to $3.25bn (£2.6bn) investing in joint-venture projects committed to before the end of 2030, while Jera will commit up to $2.55bn for a maximum of $5.8bn. However, that amount could be lower if the joint-venture finds alternative funding.

Jera was itself formed from the fuel and thermal power departments of the Tokyo Electric Power Company and the Chubu Electric Power Company. Its renewables investments form a relatively small part of its overall business, which includes oil and gas production, transportation and trading, as well as coal-fired power stations.