In an attempt to stay relevant in the low carbon economy of the future, some leading oil and gas stakeholders have been ramping up their investments in renewable energy. BP is among that group, and the company just sank $200 million into a major solar energy deal with the company Lightsource. The new investment is especially noteworthy for the sharp contrast it makes with BP’s previous attempts to move “beyond petroleum.”
$200 Million says solar energy is for real
Not too long ago, solar energy was perceived as a niche fuel for space exploration and a nifty DIY project for off-gridders, with practically no market in between.
Solar energy has gone mainstream since then, and the new BP investment in Lightsource is a case in point.
Lightsource already operates on three continents, and BP is describing the new investment as a “strategic partnership” that will drive the solar company’s reach “across the world.” Here’s the rundown from BP:
“BP will acquire on completion a 43% equity share in Lightsource for a total consideration of $200 million, paid over three years. The great 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.”
The new name is not just window dressing. Major oil and gas stakeholders are jockeying for position as the renewable energy field opens up new areas of competition. The name linkage enables BP to cement its role in energy innovation.
Group CEO and founder of Lightsource Nick Boyle sums up the strategy:
“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.”
What a difference a year makes
If that $200 million figure rings a bell, you may be thinking of BP’s old “Beyond Petroleum” tagline. The Beyond Petroleum campaign launched in 2000 at a reported cost of $200 million, with the A-list ad firm Ogilvy and Mather doing the honors. “Beyond Petroleum” was the tagline BP deployed to identify itself with the transition to a low carbon business model.
The Beyond Petroleum campaign failed. To be fair, low cost solar and wind technology were not widely available in the early 2000’s. In addition, here in the US President Bush took office in 2001 and promptly made oil and gas development a priority. By the time President Obama began his first term in 2009, it was too late. BP’s notoriously ham-handed response to the colossal 2010 Gulf of Mexico oil spill was the final nail in the coffin.
Just last year, the company’s former BP CEO John Browne detailed the collapse of the Beyond Petroleum campaign in a new book, “Connect: How Companies Succeed by Engaging Radically with Society.”
For Browne, the main problem was that the company’s intentions were running far ahead of public opinion and public policy. In addition, when the campaign was first formulated back in 1997, the technology was far from mainstream:
“In essence, the company had gotten ahead of itself and ahead of where industry and government were willing to go at that time. Beyond Petroleum was never meant to be literal – not yet, anyway – but there was still too much of a gap between the aspiration and reality, which I now regret.”
Timing is everything. Earlier this month — barely one year after Browne’s book was released — here is current BP group chief executive Bob Dudley’s statement announcing the new Lightsource partnership:
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. While our history in the solar industry was centered on manufacturing panels, Lightsource BP will instead grow value through developing and managing major solar projects around the world.
As for pushing solar into the mainstream, Lightsource already has more than 1.3 gigawatts of solar capacity under its belt. The company also has maintenance contracts for another 2 gigawatts and its growth pipeline includes another 6 gigawatts, mostly in the US, India, Europe and the Middle East.
Baby steps to a sustainable future
The Lightsource buy is a significant move, but it doesn’t necessarily mean that BP is winding down its petroleum and gas business just yet. Like ExxonMobil, the company could ratchet up its natural gas investments and claim lower carbon emissions on that score. That’s a controversial strategy, to say the least, considering the local and global impacts of natural gas production.
Controversy aside, last September BP announced a new joint venture with Argentina-based Bridas (and 50% China-owned) Bridas corporation. As described by Reuters, the new venture retains BP’s holdings in the oil producer Pan American Energy and the refiner and fuel retailer Axion Energy, which is a partner in Pan American and owner of Bridas.
Got all that? According to Reuters, on the Pan American side the venture includes 262,000 barrels of oil equivalent per day and holdings in “sought-after” Vaca Muerta shale fields, a major oil and gas producing region. On Axion’s side, it includes a refinery with a capacity of 90,000 barrels per day, and more than 755 retail sites in South America.
Reuters cites a statement from Dudley indicating that BP may be ready to take another shot at solar energy but it still isn’t ready to go beyond petroleum — yet:
“We see value-enhancing opportunities throughout PAEG’s businesses; from extending the life of mature production and developing new unconventional resources including Vaca Muerta to growth in retail fuels and lubricants marketing . . . “
As further evidence, on December 22 our friends over at Oil & Gas Journal reported that BP will join with Russia’s Rosneft to develop oil and gas in a region of Russia that includes the major Kharampurskoye field.
Photo: Mike Mozart/flickr.