February 23, 2024

BP PLC has signed a deal to acquire the 50.03 percent ownership share in Lightsource BP Renewable Energy Investments Ltd. that it does not already own.

In a GBP 254 million ($320.65 million) transaction BP’s full takeover of the solar power developer will help the British energy giant meet its demand for low-emissions electricity, BP said.

“This integration is expected to underpin and de-risk delivery of bp’s targets for its transition growth engines – in hydrogen, EV [electric vehicle] charging and biofuels as well as in power trading”, it said in a press release.

BP has set a goal of building 20 gigawatts (GW) of installed renewable energy capacity by 2025 and 50 GW by 2030. As of the third quarter of 2023 it had 43.9 GW in net capacity in the pipeline, according to its earnings report October 31.

BP expects to close the transaction, which involves the divestment of the remaining stake from founders, management and staff, in mid-2024 subject to regulatory approvals.

“Lightsource bp operates with a proven capital-light, develop, engineer, construct and farm down business model that creates value through selling majority interests in assets it has developed to strategic partners”, the media statement said. “With this capital-light model, it has built a track record of delivering renewables projects with equity returns in the mid-teens”.

Lightsource BP, a joint venture formed 2017, logged GBP 287 million ($362.31 million) in earnings before income tax, depreciation and amortization last year, according to BP.

Operating in 19 countries, Lightsource BP has 61 GW of projects under development, BP noted.

Lightsource BP had GBP 1.5 billion ($1.89 billion) in debt excluding project finance for 2022, according to BP.

“Full ownership will now enable bp to further scale up Lightsource bp and create additional value by applying bp’s complementary capabilities and strengths – including in finance and trading – fully to the business. bp will continue to target double digit equity returns from this business”, the news release said.

BP executive vice-president for gas and low-carbon energy Anja-Isabel Dotzenrath said in a statement the takeover “is a natural evolution of the partnership we have built over the past six years – now we will be able to take Lightsource bp to the next level of profitable growth and performance”.

“We will continue to scale this successful business, and also apply its capabilities and expertise to help meet bp’s growing demand for low carbon power from our transition growth engines”, Dotzenrath added.

BP intends to name senior vice-president for gas and low-carbon energy finance Joaquin Oliveira as co-chief executive of Lightsource BP after the closure of the acquisition. Oliveria is also currently a non-executive director at Lightsource BP.

Nonetheless BP intends to keep Lightsource BP’s “independent brand and organization”, the media release said.

On top of the GBP 254 million base equity payment, the selling shareholders may receive further payment over time depending on Lightsource BP’s performance and the market value of the divested portfolio.

“On completion, bp will consolidate Lightsource bp’s net debt and the existing $900 million guarantee issued by bp in respect of Lightsource bp loans will be removed from bp’s reported adjusted debt”, the press release said.

To contact the author, email jov.onsat@rigzone.com

About Author