bp has been in renewables for more than 20 years. We’ve played a part in the sector’s transformation from its early promise to becoming the fastest-growing energy source in the world.
Our experience has taught us many vital lessons, including how to prove technologies and processes, then roll them out at commercial scale. We’ve also learnt the value of complementary partnerships, for example through a 50:50 venture in the solar business Lightsource BP. By combining Lightsource’s solar development experience and track record with bp’s global scale, reach and relationships, we aim to create real change on the energy landscape.
We’re currently investing at least $500 million a year to support low carbon activities, including our renewables businesses and acquisitions. Around $200 million of this investment is used to develop options for lower carbon businesses in five areas: advanced mobility, bio and low carbon products, carbon management, digital transformation, and storage.
We’re looking at the efficient financing models that are emerging in the evolving renewable energy sector and that play a role in creating value in this sector. Renewable power projects can be highly attractive investments for certain types of investors, particularly when underpinned by long-term power purchase agreements. Finance can be raised against the assets, alongside equity investment, and allows greater scale to be realized.
Lightsource BP is an example of this and has a very successful track record of raising funding to support its growth and expansion. The BP Bunge Bioenergia joint venture was also able to obtain finance secured against its assets, again enabling bp to grow its participation in biofuels and biopower with limited further bp investment.
BP Bunge Bioenergia creates biopower from bagasse, the fibre that remains after crushing sugarcane stalks. It produces enough renewable energy to power all of the joint venture (JV) sites, with the remainder being exported to the national grid in Brazil. The JV is capable of exporting 1,200 gigawatt hours of electricity a year. Biopower is a low carbon power source, with part of the CO2 emitted from burning bagasse offset by the CO2 absorbed by sugarcane during its growth.
In the ‘evolving transition’ scenario included in the bp Energy Outlook 2019, solar could generate 11% of total global power by 2040 and this could grow to more than 20% in our ‘rapid transition’ scenario.
In December 2019 we increased our investment in Lightsource BP, creating a 50:50 joint venture. In 2018 Lightsource BP doubled the number of countries where it operated from five to ten. It is now active in 13 countries and has achieved high growth in Spain, the US, Brazil and Australia.
Typically, Lightsource BP operates through corporate power purchase agreements. For example, in the US, it worked together with local Colorado-based utility Xcel Energy to develop a 240MW solar facility to power an EVRAZ steel mill in Pueblo via a corporate power purchase agreement. EVRAZ has stated that the solar facility will make it an industry leader in lowering its carbon footprint during steel production.
Lightsource BP became the first company in the UK to provide a reactive power source from a solar plant at night
We have significant interests in onshore wind energy in the US, where we operate nine sites in six states and hold an interest in another facility in Hawaii. Together they have net generating capacity of 926MW.
In 2017 we started work with ONYX InSight, a JV between BP Castrol and Romax Technology, to develop monitoring techniques that allow us to predict maintenance needs across many bp-operated sites. The ability to identify potential turbine failures this provides, is reducing our maintenance costs by up to 30% and helping us manage the long-term integrity of our assets.
We’ve installed aerodynamic enhancements on various turbines across our wind business. The technologies are designed to increase the amount of energy captured from the wind and have helped increase overall annual energy production per unit by between 1-2%. We’re also using drones to complete detailed and one-off integrity management inspections of blades. Drones allow us to take high-resolution images of any blade damage and then schedule the appropriate repairs and maintenance. Their use also reduces risk by eliminating the need for people to access the blade directly.
Butamax®, our 50:50 JV with DuPont, has developed technology that converts sugars from corn into bio-isobutanol – an energy-rich bioproduct that has a variety of applications, for example in making paints, coatings and lubricant components. It’s a lower carbon alternative to isobutanol and can be blended with gasoline at higher concentrations than ethanol. We’re exploring market opportunities for the product.
Our Alternative Energy low carbon power unit is looking at opportunities to create value at the interplay between gas and renewable energy. Technology has the potential to revolutionize ‘emerging value chains’ and we’re developing a number of digital platforms to connect consumers with local, low carbon electricity to power their homes and transport.
bp ventures was set up more than 10 years ago to identify and invest in private, high growth, game-changing technology companies with the potential to accelerate innovation across the entire energy spectrum. Today, it’s focused on exploring new opportunities with the potential to help us deliver the energy transition.
By creating new businesses, our ultimate ambition is to build a thriving eco-system of lower carbon energy and smart digital businesses. Venturing exposes us to the emerging technologies that will shape the future and can help develop our understanding of new business models.
We’ve grown our presence in EV charging in recent years, with a focus on the key markets of China, UK and Germany, where we aim to build the fastest, most convenient networks for EV customers.
We already have more than 7,500 charging points across the UK through BP Chargemaster, the country’s largest public electric charging network, and in 2019 we began installing 150kW ultra-fast electric vehicle chargers at our bp retail sites. This new technology brings charging for the next generation of EVs closer to the speed and efficiency of refuelling a passenger car with petrol. All of the electricity supplied through our public charging network is certified as 100% renewable through the Renewable Energy Guarantees of Origin (REGO) scheme. And we’re exploring other ultra-fast battery charging technologies through our investments in StoreDot and FreeWire.
We’re working with car manufacturers to develop lubricants that can help meet the changing needs of vehicle engines. For example, we already supply e-transmission fluids to a number of the world’s largest manufacturers and we’re developing fluids that enable the use of batteries with significantly enhanced thermal management performance.
Venturing plays a key role in bp’s strategy to tackle the dual challenge of meeting the world’s need for more energy, while at the same time reducing carbon emissions