BP and EnBW Splash $1.2 Billion on UK Offshore Wind Leases

bp (formerly BP) and German power utility EnBW have won two offshore wind area leases in the Irish Sea, paying an astonishing $1.2 billion for the use of the Crown Estate sites. The ultra-high bid reflects confidence in the British government's ambitious goal to power every household in the UK with offshore wind by 2030, as well as bp's public target to achieve net-zero emissions by 2050. 

The company even expects to make a profit on the investment, predicting returns in the range of 8-10 percent. 

“bp is building a focused low carbon energy portfolio, delivering clean, reliable and affordable energy, consistent with our disciplined approach to investment. Returns from offshore wind are attractive and will be enduring for decades to come," said Dev Sanyal, bp’s executive vice president for gas and low carbon energy. "bp was a pioneer in the UK’s offshore industry, and we will bring more than 50 years of UK experience together with EnBW’s offshore wind expertise. By forging strong partnerships like this, we are developing and will deliver a world-class wind energy portfolio.”  

The two lease areas are near shore, with high wind potential and water depths of 100-130 feet, the company said. This depth is within the range for deployment of relatively economical bottom-fixed towers, and the proximity to land means less subsea cablelaying and shorter runs for wind farm service vessels. The lease areas total about 230 square nautical miles in size. bp expects to install about three gigawatts of wind capacity between both sites. 

bp and EnBW say that they have already started some preliminary activities, including collection of environmental data and bird surveys, and they have applied for a grid connection. The partners expect to make a final investment decision within four years and achieve completion in seven years. 

bp already has a large onshore wind business in the U.S., with capacity totaling 1.7GW at nine sites. Last year, it paid $1.1 billion for a 50 percent stake in Equinor's Empire Wind and Beacon Wind projects off the U.S. East Coast, which have a planned potential 4.4 GW generating capacity. These projects have been selected by New York to supply 3.3 GW of power to the state's utilities, ensuring a steady revenue stream.

By 2030, bp aims to have about 50 GW of net renewable generating capacity in its portfolio, up from 3.3 GW in 2020. To get there, the company says that it will increase its annual low carbon investment tenfold to around $5 billion a year.