With the BP oil spill successfully capped, at least temporarily, and the completion of a relief well in sight, it's time to look forward and assess the impact this disaster will have on renewable energy. Sadly, there's not much to assess. Since Senator Reid shelved the planned climate and energy bill until at least the fall, it looks like Congress couldn't or wouldn't use the oil spill as leverage to pass a carbon cap-and-trade program or a national renewable energy standard. What that lea
BP has publicly stated that it plans to sell noncore exploration and production assets for $10 billion and withhold dividend payments as a means of providing a cash reserve for Deepwater Horizon cleanup costs. The company has already announced the sale of $7 billion in upstream assets to Apache Corp. and there is speculation among financial analysts and the media that additional sales are being considered.
BP's alternative energy unit, which includes BP Wind and BP Solar, is also rumored to be high on the list of potential assets to be sold. BP Wind has gross generating capacity in the U.S. of over 1,200 megawatts (MW), with a further 1,000 MW of capacity in an advanced stage of development. BP's solar module sales were 203 MW in 2009, primarily in markets such as Germany and the U.S., representing sales growth of 25%. However, BP already announced last year that it was planning to divest BP Solar, which has become a small player in that market. Its wind assets are large, but selling them would be just another transaction in that market, which are commonplace these days and would not significantly alter the market landscape.
If BP sells all or part of its alternative energy unit then we believe that the company's "beyond petroleum" mantra will be effectively dead, which raises the question of whether another oil and gas company will step in to be the renewable energy leader for the oil and gas industry. Shell certainly has concrete views on renewable energy and the impact of fossil fuels on the environment. Chevron is a significant player in solar via its Chevron Energy Solutions subsidiary and is the world's largest producer of geothermal power. However, in the end, we believe the oil and gas companies have already missed their opportunity to be anything but followers in renewable energy.