Equinor, BP agree to US$1.1B offshore wind deal

BP has made its first splash in the offshore wind market, agreeing to buy a 50% stake in Equinor’s planned US offshore wind assets for US$1.1 billion, as part of a broader strategic partnership to push offshore wind growth in the US.
Equinor, BP agree to US$1.1B offshore wind deal Equinor, BP agree to US$1.1B offshore wind deal Equinor, BP agree to US$1.1B offshore wind deal Equinor, BP agree to US$1.1B offshore wind deal Equinor, BP agree to US$1.1B offshore wind deal

Majors look for growth in US offshore wind industry

Mark Tilly

Journalist

Mark Tilly

As part of the deal, Equinor will sell its non-operated 100%-owned interests in the Empire Wind and Beacon Wind farms offshore New York State and Massachusetts coast, respectively. 

Empire Wind, located around 45km offshore Long Island is expected to be developed in two stages and will have a total installed  capacity of more than 2 gigawatts; Beacon Wind meanwhile is located offshore Montauk Point and has the potential to have more than 2.4GW of capacity. 

Each turbine will generate more than 10MW of capacity and generation from each site is expected to power more than one million homes. 

Equinor said overnight the transaction was in line with its renewable strategy to access attractive acreage early and at scale, mature projects and capture value by de-risking high equity ownership positions. 

"We look forward to working with BP who share our strong ambition to grow in renewable energy," outgoing Equinor CEO Eldar Saetre said. 

"Our partnership underlines both companies' strong commitment to accelerate the energy transition and combining our strengths will enable us to grow a profitable offshore wind business together in the US." 

The company will remain the operator of the projects in these areas through the development, construction and operation phases and is anticipated that the wind farms will be equally staffed after a period of time. 

Through the partnership, the two majors are looking at future joint opportunities in the US for both bottom-fixed and floating offshore wind. 

"This is an important early step in the delivery of our new strategy," BP chief Bernard Looney said. 

New York State has proclaimed it wants 9 gigawatts of offshore wind capacity in its waters by 2030, while New Jersey is looking for 7GW. 

BP's acquisitions of the interests of Empire Wind and Beacon Wind has an effective date of January 1 2020 and is expected to close in early 2021. 

The announcement comes on the cusp of BP detailing its company restructuring that will see it on the path to reach net-zero emissions by 2050.

BP said last month it will invest a 10-fold increase, or US$5 billion a year, in low carbon investment, increasing its renewables capacity to 50GW by 2030. 

Equinor meanwhile hopes to grow its renewables capacity to 4-6GW by 2026 and 12-16 by 2035, focussing on areas including the US, the North Sea and east Asia. 

Separately, Equnior announced it had entered into a joint-partnership with Jera and J-power to enter into a joint-bid agreement in Japan's upcoming Round 1 offshore wind auction, with the results expected to be announced late next year.

Economist Intelligence Unit's energy lead analyst Peter Kiernan said the sustained period of depressed oil prices that is likely to continue, as the COVID-19 pandemic shows no sign of slowing down, will see other oil and gas companies make similar moves. 

"The impact of the coronavirus pandemic will sharpen the focus of operators on the future of fossil fuel demand, while likely enhancing the attractiveness of investing in lower carbon sources of energy over the longer term," he said.