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BP’s Lightsource JV gains $1.8 billion in backing for 25-GW solar pipeline

24 September 2021 Cristina Brooks

BP secured a $1.8 billion finance package for its Lightsource joint venture to develop 25 GW-worth of solar projects globally by 2025, highlighting the attractiveness of corporate solar power purchase agreements (PPAs).

The group of banks backing the combined credit and trade finance facility favored the BP venture's plan to finance an unusually large amount of solar power.

"If we're going to meet the commitments of the Paris Agreement, business as usual isn't going to cut it," Nick Boyle, group chief executive for Lightsource bp, said in a 20 September statement.

"This trend proves that renewables are mainstream and solar is playing a key role in addressing the climate crisis," said Boyle.

BP said it decided to invest in solar due to the rising demand from corporate renewable energy consumers. This includes US corporate behemoths like McDonald's, eBay, and Amazon, which signed a 250-MW PPA with a German offshore wind farm in December.

PPA growth in Europe over the past three years has been driven not only by corporations decarbonizing energy supplies while hedging energy price risk, but also by governments removing subsidies for renewable energy developers.

UK-based Lightsource bp, which was formed when BP took a stake in Lightsource in 2017, so far has developed 3.8 GW of solar projects towards the 25-GW target and plans to grow its activity through greenfield facilities, co-development, and acquisitions over the next four years.

The joint venture company is active as both a generator and energy trader, operating in at least 13 countries, where it has developed over 30 projects.

In May, Lightsource bp acquired five solar projects in Portugal to add over 1.35 GW of renewable power capacity to its portfolio.

In Greece, it participated in May PV auctions in partnership with Greek construction company Kiefer TEK, winning over 40% of the 350 MW awarded at the auction.

In Spain, Lightsource bp signed a deal with RIC Energy to develop 1.06 GW of capacity at 14 PV sites across Spain and was approaching off-takers for 10-year, European cross-border PPAs. A Madrid-based company affiliated with Lightsource bp, Lightsource Renewable Energy Spain Development, secured 5 MW in a January state auction.

Also in Spain, Lightsource bp acquired an 845-MW solar pipeline from Iberia Solar.

In Australia, BP is buying solar power from its joint venture to supply its service stations with renewable energy.

BP expands in solar, offshore wind

BP counts part of Lightsource bp's pipeline towards its own renewable generation target of 50 GW by 2050.

BP's renewables pipeline at the end of the second quarter stood at just over 21 GW, up from 13.8 GW at the end of the first quarter, according to its latest quarterly report. Most of the pipeline (17.5 GW) is solar power, and 3.7 GW is offshore wind.

BP's renewable energy pursuits in the US include, for example, its acquisition of 9 GW in US-based solar projects set to be gained from US solar developer 7X Energy following a deal in June.

Offshore wind is another growth area for BP. The company's capital expenditure in the first quarter included $700 million to form an offshore wind joint venture with Equinor aiming to develop four offshore wind projects in New York and Massachusetts with 4.4 GW (2.2 GW net to bp) capacity.

It also made a $300 million payment in connection with its share of UK offshore wind leases, obtained through its selection as preferred bidder in a recent UK seabed lease auction.

Beyond these two renewable sectors, the major has also set itself targets for the supply of both liquid bioenergy and EV charging points.

BP is aiming to integrate renewables into its business to reach a Scope 3 emissions net-zero target by 2050. That target includes cuts to "upstream oil and gas production," except for its interest in Russian gas producer Rosneft, making it one of few majors agreeing cut back on this activity.

Posted 24 September 2021 by Cristina Brooks, Senior Journalist, Climate & Sustainability, IHS Markit

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