Wind Power

BP Calls Off Sale of US Wind Business

Four months after announcing it would put its U.S. wind business on the auction block, BP reportedly is calling off the prospective sale, saying that it has determined that the timing isn’t right — though the fate of that business remains undetermined.

After receiving an undisclosed number of bids, “the company has determined that now is not the right time to sell the business,” said Matt Hartwig, a spokesperson for BP America and its Alternative Energy business, in an e-mail exchange. He wouldn’t address details of the sale process, its participants, or the bids that BP received, which he characterized as “commercially sensitive.”

BP’s wind businesses here in the U.S. encompasses 2.6 gigawatts (GW) of generating capacity spread across 16 farms in operation across nine states (Texas, Indiana, Colorado, Kansas, California, South Dakota, Idaho, Hawaii, and Pennsylvania), with another ~2 GW of projects in development “nearly shovel-ready,” according to the company.

The sale proposed in April, part of an effort to refocus BP’s attention on oil and gas, had been dependent on what kind of “attractive offers” it could get for the wind business, according to Hartwig at the time. Bloomberg New Energy Finance calculated a valuation of roughly $4-$5 billion for BP’s U.S. wind portfolio, assuming a value per wind farm of $1.5-$2.0 million per megawatt. Daniel Phillip Sinaiko, a partner at AkinGump Strauss Hauer & Feld, attributed a far lower value at around $1.5 million, though he acknowledged that the sale ” seemed to be well-timed” to take advantage of “low interest rates, high demand for assets with stable cash flows and a shortage of contracted wind power projects.”

For now, BP’s “focus will remain on safely maximizing the financial and operational performance of the existing assets,” according to Hartwig. In April he had emphasized that seeking to sell the U.S. wind business was “not an exit from alternative energy,” pointing to the company’s biofuel efforts Brazil, the U.S., and the U.K. But those are for transportation fuels, so the divestiture of the U.S. wind business essentially would be an end to the company’s pursuit of renewable energy for electricity generation, having already shut down its solar operations and sold off its wind interests in India.

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Lead image: Rejecting an offer of money, via Shutterstock