Energy Giant BP Re-Enters Solar Sector With Acquisition

Oil and gas giant BP is getting back into the solar game through an acquisition agreement with Lightsource, one of Europe’s largest developers and operators of utility-scale solar projects.

Although it was once a major player in module manufacturing, BP exited the solar industry in 2011 amid global market challenges. On Friday, BP announced that it has agreed to form a strategic partnership and acquire a 43% equity share in Lightsource for a total consideration of $200 million, paid over three years.

According to BP, 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.

Bob Dudley, BP group chief executive, says, “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. I am confident that the combination of Lightsource’s expertise and experience with BP’s relationships and resources will propel this innovative business to even more rapid growth.”

Nick Boyle, group CEO and founder of Lightsource, adds, “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. Solar power is the fastest-growing source of new energy, and we are excited to be at the forefront of this development.”

BP says Lightsource has commissioned 1.3 GW of solar capacity to date and manages approximately 2 GW of capacity under long-term operations and maintenance contracts – the equivalent of powering over half a million homes through clean energy.

BP’s interest in Lightsource BP will complement its existing Alternative Energy business, which includes wind energy, biofuels and biopower. BP Wind Energy has interests in onshore wind energy across the U.S. with total gross generating capacity of 2.3 GW. BP Biofuels has world-scale plants in Brazil, which produce around 800 million liters of ethanol equivalent per year and generate low-carbon power for Brazil’s national grid.

Lightsource BP will target the growing demand for large-scale solar projects worldwide, with a focus on grid-connected plants and corporate power purchase agreements (PPAs) signed with private companies. The company will continue to develop and deliver Lightsource’s 6 GW growth pipeline, which is largely focused in the U.S., India, Europe and the Middle East.

The company sees opportunities to create additional value through integrating solar with BP’s other businesses and trading capabilities, as well as through BP’s international footprint.

Dev Sanyal, BP’s chief executive for Alternative Energy, says, “We see Lightsource as a strategic partner with a similar vision, and with the benefits of BP’s global scale and relationships, we together plan to build the global market leader for solar.”

Under the terms of the agreement, BP will pay Lightsource $50 million on completion of the agreement, with the balance paid in installments over three years. Completion is anticipated in early 2018.

Lightsource was advised by Rothschild, White and Case, Deloitte and Baker & McKenzie.

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