$4b Investment in Wind Power by BP Alternative Energy

BP is making its first major investment in wind power with a joint venture that will lead to a major expansion of its generating capacity.

The oil company announced it had entered a five-year supply and development agreement involving five wind power projects in the US with Clipper Windpower.

The news sent Clipper shares up 80p, or 28 per cent, to 362.5p in London. The projects, with an anticipated total generating capacity of 2,015 megawatts, are situated in New York, Texas and South Dakota.

BP has also secured a mix of firm and contingent orders of up to 2,250 megawatts of additional Clipper wind turbines in its global wind energy portfolio, the companies said.

BP launched BP Alternative Energy to focus on solar, hydrogen and wind power but its wind operation has up to now been confined to two projects with a combined output of only 31 megawatts.

Steve Westwell, the chief executive of BP Alternative Energy, said: "We believe the Clipper turbine is a breakthrough in reducing the total cost of renewable energy and we are pleased to be the first large customers for this innovative technology."

This is thought to be the biggest single investment in wind power estimated at $4 billion US dollars.

The announcement, came in the same week that the British government published its energy review and a telephone poll found that 79% of respondents thought solar power and 76% wind power were the best investments in electricity generation for the UK.

BP to Create BP Alternative Energy Business Unit

BP has announced that it plans to double its investment in alternative and renewable energies to create a new low-carbon power business with the growth potential to deliver revenues of around $6 billion a year within the next decade. Building on the success of BP Solar business unit, which expects to hit revenues of $1 billion in 2008, BP Alternative Energy will manage an investment program in solar, wind, hydrogen and combined cycle gas turbine (CCGT) power generation, which could amount to $8 billion over the next ten years. Readers will note that within this $8 billion are included investments in natural gas power generation which as a fossil fuel is not in my opinion a form of alternative energy and also investment in hydrogen which is a carrier of energy rather than a source. It should also be noted that the vast majority of BP's approximately $15 billion annual investment budget will remain focussed on oil and gas projects, which currently offer much higher returns.

BP chief executive Lord Browne said "We are now at a point where we have sufficient new technologies and sound commercial opportunities within our reach to build a significant and sustainable business in alternative and renewable energy."

Browne said the first phase of investment would total some $1.8 billion over the next three years, spread in broadly equal proportions between solar, wind, hydrogen and CCGT power generation.

Investment in solar over the next three years is planned to boost BP's leading position as a leading manufacturer and supplier of photovoltaic systems. In a field where technology improvements and higher productivity are causing costs to decline, BP currently has 10 percent of the global market which is growing at 30 percent a year, faster than any other form of renewable energy.

BP currently has more than 100 megawatts of solar manufacturing capacity in the US, Spain, India and Australia, with a plan to double its capacity before the end of next year. BP recently signed a strategic joint venture to access China's expanding solar market and provide local manufacturing capacity and is exploring similar opportunities elsewhere in the region.

"As the pricing of carbon develops through trading schemes and other initiatives, the market will grow rapidly as low-emission technologies displace less clean forms of power generation."

Investment projected for wind represents a significant step up in this area of power generation for BP. The company currently runs two wind farms alongside existing oil plants in the Netherlands. It also owns industrial land in open, high-wind regions of the US, away from residential areas, providing the possibility to build the first large-scale US wind farm generating up to 200 megawatts in 2007. The company has identified enough US sites to accommodate wind turbines with a total capacity of 2,000 megawatts.

Projected investment in CCGT will be spent mainly in the US where the company already has significant co-generation capacity and is currently finalizing plans for a new $400 million scheme at one of its major plants that will deliver 100 megawatts of power to the plant, and 420 megawatts to the local electricity grid.

BP's move is at odds with the views of some in the oil industry, including the world's largest private oil and gas firm, Exxon Mobil, which argues renewables are a poor use of investors' funds.

BP Alternative Energy Website

Alternative Energy Zambia: Solar Power for Rural Electrification

One hundred and twenty one community-based organisations and nine schools in rural areas of Zambia will soon be getting BP Solar panels to generate electricity for lighting, radio, television and refrigeration. The panels will be supplied by BP Solar which has been awarded a contract by the Zambia Social Investment Fund. BP Solar is one of the world's largest solar companies and has manufacturing facilities in the United States of America, Spain, India and Australia.

Arnaud Mine, CEO of Apex-BP Solar, said: "This project is another example of the part solar energy is called on to play in sustainable development in Africa. It combines environmental, economic and social considerations, while obviating the need to set up capital-intensive infrastructure in the regions concerned. The same technology is already available in Europe for more specific applications."

The project will produce a peak power of approximately 250 kilowatts (kWp).