Alternative energy

BP plans to double its investment in alternative and renewable energies, creating a new low-carbon power business.

Building on the success of BP Solar – which expects to hit revenues of $1 billion in 2008 – BP Alternative Energy will manage an investment programme in solar, wind, hydrogen and combined-cycle-gas-turbine (CCGT) power generation, which could amount to $8 billion over the next ten years.

The first phase of investment would total some $1.8 billion over the next three years, spread in broadly equal proportions between solar, wind, hydrogen and CCGT power generation.

BP currently has 10% of the global market share for photovoltaic systems – a market which is growing at 30% a year, faster than any other form of renewable energy.

BP also has more than 100MW of solar manufacturing capacity in the US, Spain, India and Australia, with a plan to double its capacity before the end of next year. BP recently signed a strategic joint venture to access China’s expanding solar market and provide local manufacturing capacity and is exploring similar opportunities elsewhere in the region.

Investment in hydrogen fuels will include the world’s first commercial project – at Peterhead, in Scotland – to turn natural gas into hydrogen by stripping out carbon dioxide and pumping it into depleted oil reservoirs.

The hydrogen will be used at a power station in Peterhead to generate 350MW of ‘clean’ electricity, and the carbon dioxide re-injected into the offshore Miller field. BP is looking at a similar sequestration scheme to make hydrogen from low-value coke by-products at a US refinery which would be used to generate 500MW at an adjacent new-build power plant.

On the wind front, the company currently runs two wind farms alongside existing oil plants in the Netherlands. It also owns industrial land in open, high-wind regions of the US, away from residential areas, providing the possibility to build the first large-scale US wind farm generating up to 200MW in 2007. The company has identified enough US sites to accommodate wind turbines with a total capacity of 2,000MW.

Projected investment in CCGT will be spent mainly in the US where the company already has co-generation capacity and is currently finalising plans for a new $400 million scheme at one of its major plants that will deliver 100MW of power to the plant, and 420MW to the local electricity grid.

BP Alternative Energy will be based in Sunbury, Middlesex and initially employ some 2,500 people around the world.