BP puts $2 billion US onshore wind business up for sale

A key part of BP’s renewable energy ambitions went down the drain.

On Monday, the energy giant announced it would float its U.S. onshore wind business, valued at about $2 billion. Shareholder sentiment and an uncertain U.S. wind sector have apparently left too many factors hanging.

Wind-win situation

In June, BP’s new CEO Murray Auchincloss imposed a hiring freeze and halted new offshore wind projects — no big fanone might say — to reassure value-minded shareholders who worried that his company’s renewable energy plans weren’t maximizing growth from the oil and gas boom that has boomed since Russia invaded Ukraine.

His predecessor unveiled an ambitious “net-zero” plan to cut oil production by 40% by 2030, while rivals announced plans to increase output; BP’s shares underperformed as a result, even prompting takeover rumors. Auchincloss, who took over in January after a brief stint as interim CEO, has already raised that figure to 25%, and shareholders believe he could reverse previous climate goals even further. Monday’s announcement seemed to confirm that, although it also came as investors were not thrilled by the U.S. wind market:

• bp Wind Energy’s 1.3-gigawatt assets “are likely to be of greater value to another owner” and “are not aligned with our growth plans,” the company said. It tagged BP’s Lightsource solar business, which it agreed to acquire in its entirety last year, as better aligned with its plans.
• Despite significant tax breaks coming in 2022, the number of new U.S. wind projects — onshore and offshore — has fallen, and last year was the first year since the 1990s that the amount of energy generated by wind in the U.S. declined, according to the U.S. Energy Information Administration. USA today analysis earlier this year found that hundreds of local governments are banning new onshore wind and solar power plants faster than new ones are being built, making the sector increasingly unattractive to investors.

A breath of fresh benzene: Doubling down on oil and gas may not be easy for stocks. Last month, Morgan Stanley analysts cut their price target on BP shares by 9%, noting that the winds had changed on macroeconomic factors favorable to energy companies: oil prices, interest rates and inflation are all trending lower.