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Organizational Change
More Energy Giants Shift Away from Fossil Fuels, Find Future in Renewables

Energy giants Statoil and BP are part of a growing number of utilities future-fitting their operations to better compete in the emerging low-carbon economy. The two companies have recently invested in new wind and solar power projects across Europe, demonstrating their commitment to transition away from fossil fuels.

As part of its transition from a focused oil and gas company to a broad energy major, Norwegian energy company Statoil has submitted a bid in the offshore wind tender Hollandse Kust Zuid area I and II, an up to 760 MW project in the Dutch part of the Dutch North Sea. This is the first non-subsidy tender for offshore wind projects in the world.

“The Netherlands have set ambitious climate targets and we are keen to contribute to this development with renewable and low-carbon energy solutions. Statoil has for many years been one of the key suppliers of energy to the Netherlands and we are committed to continue to be so for decades to come. The zero-subsidy tender demonstrates the cost competitiveness for offshore wind and the technology’s massive global growth potential. Cheaper cleaner energy will benefit the consumers,” said Irene Rummelhoff, EVP for New Energy Solutions at Statoil.

The project will draw funding from the €10 billion Statoil has already committed to support renewable and low-carbon projects.

“Getting access to attractive renewable projects like Hollandse Kust Zuid is part of Statoil’s strategy to gradually complement the oil and gas portfolio with profitable renewable energy projects. We are encouraged to see that increased competition, improved and more cost-efficient technologies, close collaboration with suppliers and increased deployment have significantly reduced the cost of offshore wind over the last year,” added Rummelhoff.

Statoil currently operates some of the largest offshore wind farms in Europe providing energy to more than one million households in the UK and Germany. In October 2017, the utility also opened the world’s first floating offshore wind farm in Scotland.

When the Dudgeon offshore wind farm in the UK was put into full operation in November 2017, construction costs had been reduced by more than 15 percent since the investment was made, from £1.5 billion to approximately £1.25 billion.

“We continuously seek to drive down the costs of offshore wind and maintaining a high HSE standard. An important element in our application is to apply future-fit operations and maintenance concepts suitable for the Hollandse Kust area. Building on our extensive offshore experience and more than 40 years as one of the largest energy providers in Europe, we believe we have a robust and efficient project proposal that is the basis for our application. The project proposal will be firmed up in the months to come and we expect to be able, through cooperation with selected suppliers, to improve it even further. We see the Dutch energy market providing sustainable long-term value and we want to expand our position in this market,” said Rummelhoff.

Grid connection is not part of the scope of the application, and will be provided by the Dutch grid operator TenneT, scheduled to be available from July 2021. The award of Hollandse Kust Zuid area I and II is expected to take place in March 2018.

Meanwhile, Lightsource, a leading European solar energy company, and BP have agreed to form a strategic partnership to drive growth in solar power development across the globe.

On completion, BP will acquire a 43 percent equity share in Lightsource for a total consideration of $200 million, paid over three years. The majority of this investment will fund Lightsource’s worldwide growth pipeline. The company will be renamed Lightsource BP and BP will have two seats on the board of directors.

“We founded Lightsource to lead the solar revolution and chose to partner with BP because, like us, their ambition is to build and grow this company for the long-term. Not only does this partnership make strategic sense, but our combined forces will be part of accelerating the low-carbon transition. Solar power is the fastest growing source of new energy and we are excited to be at the forefront of this development,” said Nick Boyle, Group CEO and Founder of Lightsource.

“BP has been committed to advancing lower-carbon energy for over 20 years and we’re excited to be coming back to solar, but in a new and very different way,” added Bob Dudley, Group CEO at BP. “While our history in the solar industry was centered on manufacturing panels, Lightsource BP will instead grow value through developing and managing solar projects around the world. I am confident that the combination of Lightsource’s expertise and experience with BP’s relationships and resources will propel this innovative business to even more rapid growth.”

According to BP’s Statistical Review of World Energy, global installed solar generating capacity more than tripled in the past four years and grew by over 30 percent in 2016 alone. BP’s Energy Outlook analysis sees solar as likely to generate around a third of the world’s total renewable power and up to 10 percent of total global power by 2035.

In just seven years, Lightsource has grown to become Europe’s largest developer and operator of utility-scale solar projects. The company has commissioned 1.3 GW of solar capacity to date and manages approximately 2 GW of capacity under long-term operations and maintenance contracts — the equivalent of powering over half a million homes through clean energy.

BP’s interest in Lightsource BP will complement its existing Alternative Energy business, which includes wind energy, biofuels and biopower. Lightsource BP will target the growing demand for large-scale solar projects worldwide with a focus on grid-connected plans and corporate power purchase agreements (PPAs) signed with private companies. The company will continue to develop and deliver Lightsource’s 6 GW growth pipeline, which is largely focused in the US, India, Europe and the Middle East.

“We see significant opportunity to offer affordable, reliable, low-carbon power solutions by integrating solar alongside our existing Alternative Energy and gas business. We see Lightsource as a strategic partner with a similar vision and, with the benefits of BP’s global scale and relationships, we together plan to build the global market leader for solar.”

Under the terms of the agreement, BP will pay Lightsource $50 million on completion of the agreement, with the balance paid in installments over three years. Completion is anticipated in early 2018.


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