BP returns to PV with $200 million investment in Lightsource

British Petroleum (BP) has today confirmed that it has returned to the solar industry after a five-year hiatus with a $200 million investment in British renewables developer Lightsource.

The move marks the petroleum giant’s first activity in PV since it closed its subsidiary BP Solar in February 2012 after many months of financial difficulty. Operating under the new entity of Lightsource BP, the multinational will seek to develop and manage major solar projects globally, and stressed in a press statement that it will not be returning to the manufacture of solar panels.

The deal sees BP gain a 43% equity share in Lightsource via a $200 million investment paid over three years, with an initial $50 million payment due on completion of the agreement, likely in early 2018. Most of the monies will be steered toward funding Lightsource’s global solar pipeline.

Jenny Chase of Bloomberg New Energy Finance (BNEF) told pv magazine that from BP’s perspective, a $200 million investment is a relatively cheap way to keep their global strategy well informed about the solar market. “Sometimes I think these big firms just make investments because they are curious and cannot see many other investment options,” Chase said.

Following the rebranding, BP will have two seats on the board of Lightsource BP’s directors.

Lightsource was a key driver of the British solar boom between 2014 and 2016, and has since expanded its development horizons to a global scale since the contraction of the U.K. market. Company CEO Nick Boyle remarked that the partnership with BP not only makes strategic sense, but “our combined forces will be part of accelerating the low-carbon transition”.

Boyle added: “Solar power is the fastest growing source of new energy and we are excited to be at the forefront of this development.”

BP group chief executive Bob Dudley said that the company is excited to be coming back to solar “in a new and very different way”.

From petrol to PV
The now defunct BP Solar was a pioneer of the present-day solar industry, having first made moves to support the technology in 1981 via a 50% acquisition of Lucas Energy Systems. The prevailing two decades saw the firm play a leading role in advancing R&D and module production efficiency, but difficulties arose in 2010 as the company struggled in the face of falling sales throughout the PV industry. BP Solar ceased production at its U.S. facility in the summer of 2011, and exited the solar industry altogether six months later.

Since that time, utilities and petrol and oil giants have at various times flirted with the solar industry, with relations and collaborations improving considerably in the past 18 months. French oil giant Total has been a long-term backer of PV via SunPower, while Dutch-British petroleum conglomerate Shell in the summer acquired energy developer MP2 Energy, which has a growing renewables portfolio.

In investing in Lightsource, BP is engaged with one of the more dynamic clean energy operators in Europe, with 1.3 GW of commissioned solar capacity to date and a further 2 GW under long-term O&M contracts. Combined, Lightsource manages enough solar to power 500,000 U.K. households.

According to the joint press release, BP will also complement Lightsource BP”s existing wind, biofuel and biopower business. BP Wind Energy already handles a 2.3 GW wind power portfolio, while BP Biofuels is very active in Brazil.

As for solar specifically, Lightsource BP will focus on developing grid-conneted PV plants and securing corporate power purchase agreements (PPAs) with private companies. The main areas of growth are likely to be the U.S., India, Europe and the MENA region.

“We expect Lightsource mostly to invest the money outside of the U.K. market,” added BNEF’s Chase. “Certainly the problem with the U.K. solar market isn’t the lack of capital for projects. BP, with operations in many markets worldwide including some developing countries, may be able to help Lightsource’s project development with connections with government, reputation, and even by offering some sites for projects.”

This article was amended on 15/12/2017 – pv magazine had previously stated that BP has 20 GW of solar capacity under long term O&M contracts. This figure was corrected to 2 GW.