BP abandons wind energy in favor of solar projects. Why?
By Asif Aydinli
The British company BP Plc has decided to sell its U.S. wind energy business, known as BP Wind Energy. According to the company's press service, this move is part of BP's strategic shift to focus its efforts on other areas of renewable energy.Currently, BP Wind Energy holds stakes in ten wind farms located across seven U.S. states. The total installed capacity of these farms is 1.3 GW, making BP a significant player in the U.S. wind energy market. Analysts at RBC Capital Markets estimate the value of this business at approximately $2 billion, as reported by the Financial Times.
A key reason for the sale is BP’s intention to strengthen its position in the solar energy sector. The company is already actively developing this area through its Lightsource BP platform, which has become a critical part of its renewable energy strategy in the U.S. According to BP’s Executive Vice President for Gas and Low Carbon Energy, W. Lin, selling the wind business is a step towards streamlining the company’s asset portfolio, allowing it to concentrate on priority growth areas.
It’s important to note that BP’s exit from wind energy comes amid significant challenges in the industry. The new business of manufacturing equipment for wind energy is facing record losses. While demand for wind turbines and blades is growing, profits at leading companies are plummeting. This dilemma points to a serious crisis in the green energy sector, according to Bloomberg commentators.
Analysts highlight the case of the Chinese company Xinjiang Goldwind Science & Technology Co., the world’s largest manufacturer and operator of wind turbines. According to official figures, the company’s profit in the third quarter plummeted by 98%, to 9.4 million yuan ($1.29 million). Despite a quarter-on-quarter increase in sales volumes, Goldwind's shares fell 5% on the Shenzhen Stock Exchange. The crisis is driven by several factors, including rising material costs, carbon emission taxes, low kilowatt prices, and the unpredictability of weather, all of which undermine the profitability of projects.
Other major companies, such as Siemens AG, Vattenfall AB, and Iberdrola SA, are facing similar challenges. Many businesses without strong financial reserves are nearing bankruptcy, underscoring the severity of the crisis in the wind energy industry.
BP’s decision to sell its wind energy assets and focus on solar power reflects both the company's strategic priorities and broader trends in the renewable energy market, which is grappling with numerous challenges and uncertainties.
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