BP to set up multi-billion renewable energy offshoot
Energy giant BP has announced plans to set up the world's biggest low-carbon power business, which it believes will bring multi-billion pound profits within the next ten years.The company has said it will double its investment into alternative and renewable energy sources and build upon the success of BP Solar, which is expected to start bringing in revenues of US$1 billion in 2008.
The new company in the stable will be known as BP Alternative Energy and is likely to invest some US$8 billion over the next ten years.
BP has been careful not to claim the company will be using solely zero-carbon technologies, as it is also investigating the potential of low carbon, ultra-efficient generation.
As well as investing in 'traditional' renewable energy sources such as wind and solar the company will be backing relative new comers such as hydrogen and combined cycle gas turbine (CCGT) power generation, a system that uses both gas and steam turbine cycles in a single plant to produce electricity with high conversion efficiencies and low emissions.
To a degree the development of the alternative technologies are about 'future proofing' BP, a company which recognises changing carbon markets and the rising cost of fossil fuels is going to make renewables and their ilk an increasingly attractive economic prospect.
"Consistent with our strategy, we are determined to add to the choice of available energies for a world concerned about the environment, and we believe we can do so in a way that will yield robust returns," said BP chief executive Lord Browne.
"Our recent experience, particularly with solar, has given us the expertise and confidence to develop new products and markets alongside our mainstream business. We are now at a point where we have sufficient new technologies and sound commercial opportunities within our reach to build a significant and sustainable business in alternative and renewable energy."
Browne said the first phase of investment would total some $1.8 billion over the next three years, spread in roughly equal proportions between solar, wind, hydrogen and CCGT power generation.
Following investment will require each technology to prove itself and will depend on the nature of opportunities and their profitability.
"We are focusing our investment in alternatives and renewables on power generation because it accounts for over 40% of man-made greenhouse gas emissions, the biggest single source," said Lord Browne.
"It is also the area where technology can be applied most cost-effectively to reduce emissions.
"As the pricing of carbon develops through trading schemes and other initiatives, the market will grow rapidly as low-emission technologies displace less clean forms of power generation."
The first wave of investment will see the world's first commercial hydrogen power station built in Peterhead, Scotland close to the North Sea oil fields.
The plant will strip carbon dioxide from natural gas and use the remaining hydrogen as a 'clean' fuel, while pumping the CO2 back into undersea depleted oil reservoirs as part of a massive sequestration scheme.
BP is looking at a similar scheme to make hydrogen from low-value coke by-products at a US refinery which would be used to generate 500 megawatts at an adjacent new-build power plant.
By Sam Bond