BP is actively seeking partnerships for offshore wind projects in Japan and is considering investments in hydrogen technology companies to address challenges such as inflation and equipment bottlenecks that have impacted the renewables sector. The move is part of BP's broader strategy to expand in low-carbon energy, adapting to a long-term business model amidst the global transition away from fossil fuels. While some investors have criticized the shift, Anja-Isabel Dotzenrath, head of BP's renewables business, emphasized that it's “time to deliver.”
The recent $540 million write-down on wind power projects offshore New York underscored challenges faced by BP and its partners in the U.S. offshore wind industry. Dotzenrath acknowledged issues with inflation and regulatory hurdles leading to projects running over budget and time. Globally, the renewables sector has grappled with slow permitting, technological hurdles, rising raw material costs, and increased capital expenses.
To ensure internal returns of 6% to 8% on renewables projects, Dotzenrath stated that BP is actively working to reduce costs globally. The company is exploring various strategies, including optimized purchasing approaches and potential direct investments in the supply chain.
In the offshore market, BP is targeting clusters of four-to-eight gigawatts in three to five global clusters. Japan is a key focus, where BP is likely to collaborate with local utilities. Dotzenrath emphasized the necessity of a Japanese partner for success, citing the need for assistance in permitting processes and onshore grid connection establishment.
Partnerships are considered crucial not only in offshore wind but also in addressing bottlenecks in the hydrogen sector, another area of strategic growth for BP. While BP doesn't produce electrolysers, which are essential for hydrogen production, Dotzenrath did not rule out the possibility of greater involvement. This could involve becoming an anchor investor in a leading technology manufacturer building electrolyser production plants.
BP's commitment to renewable energy, hydrogen, biofuels, and electric mobility is evident in its plan to spend up to $65 billion between 2023 and 2030, accounting for half of the company's investments by the end of the decade, compared to 30% in 2022.