BP may sell off green energy interests

This Is Money (UK): BP today indicated it could put its $7bn wind and solar energy businesses up for sale. In a startling volte-face from the ‘Beyond Petroleum’ future envisaged by his predecessor Lord Browne, chief executive Tony Hayward today signalled green energy will no longer be a BP priority.

In a long-awaited strategy statement – in which unambitious oil production targets sent shares in the company falling, down 8½p at 558p – Hayward put a price on its alternative energy businesses and strongly hinted that investors are invited to come and take a look.

‘We intend to grow this business predominantly for its equity value,’ said Hayward. ‘Taking stock-market valuations for similar companies, we estimate it is already worth between $5bn and $7bn. As we go forward we will be looking at how best we can realise that growing value for shareholders.’

Analysts said BP’s options on the business range from an outright sell, through inviting co-investors to help fund the business into the future, to a spinoff via a stock-market flotation in which it may or may not keep a stake. The business could also be broken up, as Vivienne Cox, BP’s alternative energy boss, who was demoted in a Hayward reshuffle last year, broke down the valuations of the alternative energy segments.

BP’s solar business, which is active in the US, Australia, Spain and Germany, is currently producing 800 megawatts of electricity – the output of a medium-sized traditional power station. But with over 160 installations and the rush on investment worldwide in the sector in recent months, Cox has set a value of between $2.1bn and $3.9bn.

BP’s less-developed wind business is worth between $1.8bn and $2.1bn, said Cox. BP has done little in the UK, but has a land bank which it says could produce 15,000 megawatts of electricityin Europe, India, China and in the US (at one of America’s largest wind farms, in Colorado).

Other businesses under Cox’s wing include the development of hydrogen fuel cells and gas-fired power stations, including a BP site on the south coast, and they could be worth another $1bn. The decision was seen as a further attack on the legacy of Browne, who Hayward replaced last May after the peer was forced to resign in a perjury scandal.

In 2000, to some derision, Browne replaced the longstanding BP shield with the company’s current floral motif. In an attempt to emphasise BP’s green credentials, he said BP could in future stand for Beyond Petroleum. By 2005, Browne ordered the formation of BP Alternative Energy and gave the brief to Cox.Since then BP has invested $1.5bn in green energy projects.

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