BP returns to solar with investment in Lightsource

By Ron Bousso and Susanna Twidale

(Reuters) - BP is getting back into solar power six years after its first, failed foray, with a $200 million investment in solar generator Lightsource that the oil and gas firm expects will deliver profits and deepen its foothold in renewable energy.

BP, which adopted a sunburst logo two decades ago to convey its ambition in solar energy, agreed to acquire a 43 percent stake in Europe's largest solar developer. It will be renamed Lightsource BP.

The London-based solar firm plans to quadruple its solar capacity to 8 gigawatt (GW) through large-scale projects in the United States, India, Europe and the Middle East.

The investment, a fraction of the approximately $17 billion BP has spent in 2017, comes six years after BP wrote down billions on its first investment in solar, when its panel manufacturing business struggled with competition from China.

Dev Sanyal, who heads BP's Alternative Energy business said Lightsource differed from its previous investment because it was a solar power generator rather than maker of hardware.

"We see in the solar business, in the way Lightsource have crafted it, a very attractive business proposition. We see growth in terms of return, cash delivery and profitability," Sanyal told Reuters.

Although globally state subsidies for renewable projects are falling as technology costs come down, new projects are increasingly turning to long-term power purchase agreements (PPAs) with corporations to secure revenues.

"The beautifully attractive thing about solar is the fact that it creates very predictable long-term revenue streams," said Lightsource CEO Nick Boyle in an interview, adding such agreements were just as "bankable" as a government subsidy.

BP was the first of the world's top oil companies to put a focus on energy sources other than fossil fuels two decades ago with an $8 billion investments in renewable energy, using the marketing slogan "Beyond Petroleum".

BP, which also has wind power, biofuels and biopower investments, said it would pay $50 million when the deal was completed and the balance of the $200 million over three years.

BP does not give a breakdown of profit or loss from its renewable investments.

BP, which will have two seats on Lightsource board, expects the deal to be completed in early 2018. Lightsource were advised by Rothschild, White and Case, Deloitte and Baker & McKenzie.

Lightsource has commissioned 1.3 GW of solar capacity to date and manages about 2 GW of capacity under long-term operations and maintenance contracts.

Other oil majors including Royal Dutch Shell and France's Total have invested in renewable energy as they prepare for a shift away from fossil fuels in the fight against climate change.

Global installed solar generating capacity more than tripled in the past four years and grew by over 30 percent in 2016 alone, according to BP's Statistical Review of World Energy.

BP expects solar to generate about a third of the world's total renewable power and up to 10 percent of total global power by 2035.

Lightsource were advised by Rothschild, White and Case, Deloitte and Baker & McKenzie

(Additional reporting by Arathy S Nair in Bengaluru; Editing by Jason Neely and Edmund Blair)