Wednesday 19 November 2008

BP pulls out of British wind sector to renew its energy in the US

Canberra Times
Saturday 8/11/2008 Page: 20

wind farmsBP has dropped all plans to build wind farms and other renewable schemes in Britain and is instead concentrating the bulk of its $US8 billion ($A12 billion) renewables spending program on the United States, where government incentives for clean energy projects can provide a convenient tax shelter for oil and gas revenues.

The decision is a major blow to British Prime Minister Gordon Brown, who has promised to sweep away all impediments to ensure Britain is at the forefront of the green energy revolution. BP and Shell - which has also pulled out of renewables in Britain - are influential among investors. BP has advertised its green credentials widely in Britain and has a representative on the ruling board of the British Wind Energy Association.

But it said difficulty in getting planning permission and lower economies of scale made the British wind sector far less attractive than that of the US. "The best place to get a strong rate of return for wind is the US," a BP spokesman said. He confirmed the group had shelved ideas of building an onshore wind farm at the Isle of Grain, in Kent, and would not bid for any offshore licences.

BP has enormous financial firepower as a result of recent high crude oil prices. Its move away from wind energy in Britain follows a decision by Shell to sell off its stake in the London Array project off Kent, potentially the world's largest offshore wind farm.

Shell gave the same reasons as BP for the move, saying the economics of British wind were poor compared to those onshore across the Atlantic, where incoming president Barack Obama has promised to spend $US150 billion ($A223.7 billion) over 10 years to kick start a renewable energy revolution.

BP said about $A2.24 billion would be spent next year on US wind projects and the company expected to spend the $A12 billion up to the year 2015. BP is proceeding with limited solar, biofuels and other schemes, but will concentrate on wind. By the end of 2008, BP expects to have one gigawatt of US wind energy installed and plans to have trebled this by 2010.

Britain is not the only country to miss out on BP's largesse. The company said on Thursday it was also pulling out of China, India and Turkey. BP had formed a joint venture with Beijing Tianrun New Energy Investment Company, a subsidiary of Goldwind, China's largest turbine maker.

The two companies had signed a deal in January under which they planned 148.4MW of wind capacity in Inner Mongolia. BP had also started building two wind farms in India and was considering schemes in Turkey. It is now expecting to sell off the Indian facilities and halt work in Turkey.

Green campaigners have been highly sceptical about BP's plans to go "beyond petroleum" and feared the company's new chief executive, Tony Hayward, would drop this commitment, started under his predecessor, John Browne. The company has always insisted it remained keen to look at green energy solutions. It is also in the middle of a marketing campaign, with huge posters on the London Underground boasting of its moves to diversify into wind and other energy sources.

0 comments: