Oil giant BP is in a significant step towards its energy transition goals has entered the offshore wind market on Thursday with a $1.1 billion deal to buy 50% stakes in two U.S. developments from Norway’s Equinor.
Reuters reports that the British oil and gas company has set itself a target of increasing its renewable power generation capacity 20 fold over the coming decade to 50 gigawatts (GW).
BP’s head of gas and low carbon energy, Dev Sanyal, told Reuters that as part of the deal, BP and Equinor also agreed to form a partnership to develop other offshore wind projects in the United States.
European oil firms are under pressure from activists, banks, investors and some governments to shift away from fossil fuels and analysts say offshore wind farms are probably the quickest way for them to scale up.
The deal includes the Empire Wind project off New York and Beacon Wind off Massachusetts, which could together generate up to 4.4 GW – enough power for more than two million homes.
Equinor’s renewables chief Pal Eitrheim told Reuters that the Empire project is expected to start operations in the mid-2020s.
He added that Equinor will be the operator of the two projects and BP staff will join the development and construction phases as part of the two companies’ partnership to develop both bottom-fixed and floating offshore wind facilities.
An executive at the state-controlled firm told Reuters that Equinor expects to book capital gains of roughly $1 billion from the transaction.
Equinor’s head of renewable energy Paal Eitrheim said: “it confirms that our strategy to get early access to the U.S. coast was right and it created the value,”.
The $1.1 billion deal, which does not include development spending, is expected to close in early 2021.