BP enters UK offshore wind power sector

BP and Energie Baden-Wuerttemberg AG (EnBW) of Germany have been selected as the preferred bidder for two major leases in the UK Offshore Wind Round 4, the first such UK leasing round since 2010.  

This marks BP’s entry to the UK’s offshore wind power sector, currently the largest in the world, and further progresses its plans to rapidly build a world-class wind energy business.

The leases, both located in the Irish Sea, offer a combined potential generating capacity of 3 GW, the maximum award possible under the rules of the round, and a 60-year lease life. Once operational, this generating capacity would be sufficient to power more than 3.4mn UK households with clean electricity.

BP and EnBW intend to form a 50:50 joint venture to jointly develop and operate the leases. The joint venture expects to make four annual payments of £231mn on each lease before projects reach final investment decision (FID). Projects are expected to be operational in seven years.

The two leases are highly advantaged, with strong wind resources and proximity to shore that make them attractive investment opportunities, reports BP. Their near-shore location, around 30 km off the coast of north-west England and north Wales, will allow for lower cost and more reliable transmission infrastructure. Their shallow water depths of 35–40 metres are also expected to support efficient and cost-effective development.

Commenting on the news, BP Chief Executive Bernard Looney says: ‘We are fully confident that these highly advantaged resources will deliver, at a minimum, the 8–10% returns we demand of our renewables investments.’

He continues: ‘Additionally, offshore wind is integral to delivering the UK’s green industrial revolution. Building on the UK’s strengths, the government’s 10-point plan aims to produce enough offshore wind to power every UK home, quadrupling output to 40 GW by 2030 – and BP is delighted to play a part in this.’

In 2020, BP set out its strategy to become a net zero company by 2050 or sooner, and help the world get to net zero. Rapidly growing its renewables business is core to this strategy – by 2030, the company aims to have developed around 50 GW of net renewable generating capacity, up from 3.3 GW in 2020. The strategy also includes increasing BP’s annual low carbon investment 10-fold, to around $5bn/y.

BP already has a significant onshore wind business in the US, with a gross generating capacity of 1.7 GW, operating nine wind assets across the country. The company has formed a partnership with Equinor to develop offshore wind projects in the US, including the Empire Wind and Beacon Wind projects off the East Coast that have a planned potential 4.4 GW generating capacity.

EnBW is a major German energy company, with more than 10 years of experience in designing, constructing and operating wind assets. It plans for installed renewable energy capacity to account for 50% of its generating portfolio by the end of 2025, and aims to reach climate neutrality by 2035. The company currently has onshore wind assets in Germany, France and Sweden, and operates four offshore wind assets in the German Baltic Sea and North Sea.

Meanwhile, a 50:50 joint venture between Total and Macquarie’s Green Investment Group (GIG) also secured rights to a seabed lease in the Eastern Regions zone in the wind leasing round. The project, which will be located off the UK’s East Anglian coast, could deliver up to 1.5 GW of renewable electricity. Total is already involved in the 1.1 GW Seagreen project off the east coast of Scotland and in Erebus, a 96 MW floating offshore wind project in the Celtic Sea. It is also partnering GIG in South Korea, co-developing a major portfolio of floating offshore wind projects. GIG is one of the UK’s largest funders of offshore wind, and has a growing portfolio of renewable developments in Europe.

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