Oil giant BP will fully own solar developer Lightsource

The joint venture will help BP expand its work in sectors such as biofuels and EV charging, the company said.

A large solar panel installation

Photo credit: Visions of America / Joseph Sohm / Universal Images Group via Getty Images

European oil major BP will buy up the rest of its joint venture with the solar development company, Lightsource bp, in a deal made public on Thursday. 

Lightsource, which has projects throughout the U.S., is now one of the largest developers and operators of large-scale solar and storage assets in the nation. Prior to the announcement, BP owned roughly half of the developer.

The acquisition was valued at $322 million, Reuters reported.

The transaction reflects a mixed renewables landscape for fossil fuel companies. Most of the big ones dabble in climatetech and have expressed enthusiasm about their role in the energy transition, even while maintaining and even expanding their huge investments in oil and gas. 

In its announcement of the deal, BP said acquiring the remainder of Lightsource was a “natural evolution” of the multi-year partnership between the two companies that will help Lightsource grow while simultaneously applying its expertise to BP’s business. The oil company specifically highlighted so-called “transition growth engines” — including hydrogen, electric vehicle charging, biofuels, and power trading — as a beneficiaries of the acquisition. 

Last year, BP invested about 30% of its total capital expenditures in those areas. Between now and 2030, BP plans to invest $8 billion in its "transition growth engines," while investing the same amount in its oil and gas business.

Despite high profile investments like BP’s in Lightsource, oil and gas majors are overall still spending more than double what they should on fossil fuels according to a report the International Energy Agency released this month that elaborates a scenario that would limit warming to 1.5 degrees Celsius. 

As a whole, oil and gas majors spent 2.7% of their total capital expenditures on clean energy in 2022, a category that includes bioenergy. And in recent months, Exxon and Chevron have doubled down on extraction, acquiring new oil companies while investing in climate-focused industries like lithium extraction and carbon capture and storage. BP itself expects to deliver higher oil and gas earnings through 2030 than it previously expected, the company said earlier this year. 

BP said it would utilize Lightsource’s expertise to help meet its own increased demand for low-carbon power as it invests in new industries like bioenergy and hydrogen. Last year, BP announced a partnership with international chemical producer Linde to produce low carbon hydrogen in Texas. The company has also invested in offshore wind, though it has raised concerns about recent market snags.

Solar investments overall are climbing, in part due to intense demand spurred by the Inflation Reduction Act. In an international first, solar investments are set to beat out oil investments this year, according to the IEA

Public market financing for solar was also up 47% in the first nine months of 2023 compared to the same period of 2022, according to communications firm Mercom Capital Group. Debt financing activity in that period was 93% higher than in 2022, Mercom said. 

Mergers and acquisition activity has fluctuated in the same time period, however, with 75 deals this year versus 90 in 2022. 

“Despite inflationary challenges and elevated interest rates, financing in the solar industry has remained robust,” said Raj Prabhu, Mercom’s CEO in a statement about the company’s Q3 2023 report. “M&A activity, on the other hand, has faced adverse effects, especially in the realm of project acquisitions, due to increased due diligence, higher costs, delays, and a tight labor market.”

There are some indications that M&A activity could pick up, though. Larger companies are positioned to drive consolidation in the industry as more projects get off the ground, due largely to U.S. incentives. 

The Lightsource deal is set to close in 2024.

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