BP, in collaboration with Equinor, announced a pre-tax impairment charge of $540 million in the third quarter of 2023 in connection with its offshore wind projects in New York. The charge, recognized as an ‘other' adjusting item, reflects the challenges faced by the companies as they continue to navigate inflationary pressures and permitting delays in the US offshore wind sector.
The partners had sought to renegotiate power purchase agreements for three projects: Empire 1, Empire 2, and Beacon Wind 1. However, their request, submitted to the New York Public Services Commission on June 7, was rejected on October 12. As a result, BP and Equinor are currently evaluating the impact of this decision on these projects and their future development plans.
BP's third-quarter results reveal that the total adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) for its gas and low carbon energy business amounted to $2.8 billion, a decrease from $7.4 billion during the same period in 2022. Despite this setback, BP's commitment to renewable energy remains evident, with its installed renewables capacity increasing from 2GW in the third quarter of 2022 to 2.5GW in the third quarter of 2023. Furthermore, their total developed renewables ready for a final investment decision (FID) and renewables pipeline expanded to 50GW in the third quarter of 2023, up from 31.5GW in the same period the previous year.
BP and Equinor are determined to address the challenges they face in the offshore wind sector and continue their efforts to contribute to the global transition to renewable energy sources.
