Norwegian company Equinor and the British oil giant BP have entered into a strategic partnership to develop offshore wind projects in the US.
Under the agreement, BP will buy a 50% stake in Equinor's Empire Wind and Beacon Wind assets on the US east coast for a total consideration before adjustments of USD 1.1 billion, marking the UK-based oil giant's entry into offshore wind.
Through this transaction, the two companies are also establishing a strategic partnership for further growth within the offshore wind sector in the US.
Currently, Equinor holds a 100% interest in both the Empire Wind lease, located off the coast of New York State and the Beacon Wind lease, located off the Massachusetts coast.
Bernard Looney, BP’s chief executive, said: “This is an important early step in the delivery of our new strategy and our pivot to truly becoming an integrated energy company. Offshore wind is growing at around 20% a year globally and is recognized as being a core part of meeting the world’s need to limit emissions. Equinor is a recognized sector leader and this partnership builds on a long history between our two companies. It will play a vital role in allowing us to deliver our aim of rapidly scaling up our renewable energy capacity, and in doing so help deliver the energy the world wants and needs.”
Equinor said the transaction was in line with its renewable strategy to access attractive acreage early and at scale, mature projects, and capture value by de-risking high equity ownership positions.
Equinor will remain the operator of the projects in the two leases through the development, construction, and operations phases and it is anticipated that the wind farms will be equally staffed by BP and Equinor, after a period of time.
"We look forward to working with BP who share our strong ambition to grow in renewable energy. Our partnership underlines both companies’ strong commitment to accelerate the energy transition and combining our strengths will enable us to grow a profitable offshore wind business together in the US,” says chief executive officer in Equinor, Eldar Sætre.
The agreement comes a month after bp announced its new strategy, including aims to increase its annual low carbon investment 10-fold to around $5 billion a year and grow its developed renewable generating capacity from 2.5 gigawatts (GW) in 2019 to around 50GW by 2030.
The Empire Wind lease area, which was awarded to Equinor in 2016, is 15-30 miles southeast of Long Island and has a total area of 80,000 acres. The area will be developed in two phases.
Empire Wind phase 1 secured an offtake agreement in the July 2019 solicitation and will have between 60 and 80 turbines. The whole Empire Wind lease area has a potential generation capacity of 2GW with a generating capacity of more than one million homes.
Beacon Wind covers a total area of 128,000 acres of federal waters off New England’s coast, approximately 20 miles south of Nantucket and 60 miles east of Montauk Point. When fully developed it is expected to have a total generating capacity of 2.4GW, sufficient to provide power to more than a million households in the Northeast US.
First power from Empire Wind’s phase 1 is expected in the mid-2020s and phase 2 is preparing for upcoming solicitations. Beacon Wind will also be developed for future solicitation opportunities and will begin a review process to secure all necessary permits for the project.