BP Puts $2 Billion US Onshore Wind Business Up for Sale

A key part of BP’s renewable ambitions is gone with the wind.

On Monday, the energy giant announced that it will put its US onshore wind power business, estimated to be worth about $2 billion, on the market. Shareholder sentiment and an uncertain US wind sector seemingly left too many factors up in the air.

Wind-Win Situation

In June, new BP CEO Murray Auchincloss implemented a hiring freeze and paused new offshore wind projects — not a big fan, one might say — in order to placate value-interested shareholders who worried his company’s renewables plans weren’t maximizing growth from oil and gas, which boomed after Russia’s invasion of Ukraine.

His predecessor rolled out an ambitious “net zero” plan to cut oil production by 40% by 2030, while rivals announced plans to hike their production; BP’s shares underperformed the competition as a result, even resulting in takeover rumors. Auchincloss, who took over in January after a brief stint as interim CEO, has already rowed that back to 25%, and shareholders think he could unwind previous climate targets even more. Monday’s announcement seemed to confirm as much, though it also happened because investors haven’t been blown away by the US wind market in general either:

• BP Wind Energy’s assets, with a 1.3 gigawatt generating capacity, are “likely to be of greater value for another owner” and are “not aligned with our plans for growth,” the company said. It flagged solar firm Lightsource BP, which it agreed to acquire in full last year, as better suited for its plans.
• Despite major tax breaks introduced in 2022, new US wind projects — onshore and offshore — have declined, and last year was the first year since the 1990s that the amount of power generated by wind in the US fell, according to the US Energy Information Administration. A USA Today analysis earlier this year found hundreds of local governments are banning new onshore wind and solar power faster than what’s being built, making the sector increasingly undesirable for investment.

Breath of Fresh Benzene: Doubling down on oil and gas might not be a breeze for shares, either. Last month, Morgan Stanley analysts cut their share price target for BP by 9%, noting that the winds have changed when it comes to the macro factors that benefit energy companies: oil prices, interest rates, and inflation are all trending down.