British oil and gas giant BP has recently announced its agreement to purchase the remaining 50.03% stake in the solar energy joint venture (JV) Lightsource bp for £254 million.
British oil and gas giant BP has recently announced its agreement to purchase the remaining 50.03% stake in the solar energy joint venture (JV) Lightsource bp for £254 million. This acquisition marks a significant step in BP’s commitment to expanding its presence in the renewable energy sector.
The joint venture operates with a capital-light business model, focusing on the development, engineering, construction, and subsequent majority interest sale of assets to partners. By attaining full ownership, BP aims to scale up Lightsource bp and leverage its complementary capabilities, including finance and trading, to bring additional value to the venture.
The company is committed to achieving double-digit equity returns from Lightsource bp, showcasing its confidence in the potential growth and profitability of the renewable energy market. Furthermore, BP plans to utilize Lightsource bp’s expertise to develop cost-competitive renewable power, aligning with its own targets for low-carbon power and sustainability.
Anja-Isabel Dotzenrath, BP’s Gas and Low-Carbon Energy Executive Vice President, emphasized the natural evolution of the partnership built over the past six years. She expressed confidence in taking Lightsource bp to the next level of profitable growth and performance, aligning with BP’s broader strategy of transitioning toward hydrogen, electric vehicle charging, biofuels, and power trading.
Dotzenrath stated, “We will continue to scale this successful business and also apply its capabilities and expertise to help meet BP’s growing demand for low-carbon power from our transition growth engines.”
The acquisition represents the culmination of a journey that began in 2017 when BP initially acquired a 43% stake in Lightsource bp by investing $200 million (£158.07 million). Since then, the joint venture has witnessed substantial growth, expanding operations from three to 19 countries and building a robust 61GW development pipeline, supported by a workforce of over 1,200 employees.
In December 2019, BP and Lightsource bp decided to equalize their interest in the venture, resulting in a simplified 50:50 JV structure. As part of this arrangement, BP committed to purchasing equity in Lightsource bp, leading to the current agreement to acquire the remaining stake.
Shareholders of Lightsource bp can anticipate additional payments over time, contingent on the company’s performance and market value. This incentivizes continued success and aligns the interests of both parties for long-term sustainability and growth.
For the full year 2022, Lightsource bp reported underlying earnings before interest, taxes, depreciation, and amortization (EBITDA) of £287 million, with corporate-level debt adjusted for cash (excluding project finance) at £1.5 billion. These figures underscore the financial health and viability of the joint venture.
Looking ahead, Joaquin Oliveira, BP’s Finance for Gas and Low Carbon Energy Senior Vice President, is set to assume the role of Lightsource bp co-CEO in early 2024. This leadership transition further emphasizes BP’s commitment to integrating and maximizing the potential of Lightsource bp within its broader portfolio.
BP’s acquisition of the remaining stake in Lightsource bp not only underscores its dedication to renewable energy but also positions the company as a key player in driving the global transition toward sustainable and low-carbon power solutions. This strategic move aligns with the broader industry shift towards greener alternatives, setting the stage for a more sustainable energy future.