BP’s announcement of its new investment in solar reflects the continued momentum toward renewable energy. Lower prices, technological improvements and new consumer interest have combined to fundamentally change the market for cleaner energy — even without a much of a guiding hand from the state or federal governments. If a leader in fossil fuels can see the self-interest in diversifying its business model, then Florida and the nation can contribute more by creating a regulatory framework that’s good for consumers, business and the environment.
The global energy giant recently announced it would spend $200 million to acquire a large stake in British-based Lightsource, a solar power developer. BP’s investment would eventually give it a 43 percent stake in the company, allowing Lightsource to grow globally and giving BP a vehicle to focus its solar business.
BP was an early leader in the clean energy field, and it still has large holdings in wind power and biofuels. But it had largely closed down its solar operations, which focused on manufacturing equipment such as solar panels, after facing stiff competition from companies in Asia. Lightsource represents a new tack for BP; rather than investing on the equipment or technology side, Lightsource develops and manages solar installations. With double-digit growth in solar expected over the coming years, BP’s investment, one company official said, would bring growth, solid cash returns and profits on the new business side. Experts said the deal could generate a predictable and long-term revenue stream, which the industry needs as it makes the transition to cleaner energies.
BP’s commitment reflects the increasing role the company foresees for renewables, and the opportunities it provides legacy players in the energy industry to adapt and grow. With demand for oil expected to level off in the next several years, through about 2040, the race is on for these companies to carve a niche in an ever-changing landscape where electric vehicles, energy-efficient products and other changes in technology and lifestyles pose a challenge to fossil fuels.
According to a BP review of world energy, solar generating capacity more than tripled in the past four years around the globe and grew by over 30 percent in 2016. BP expects solar to generate a third of the world’s renewable power and up to 10 percent of total global power by 2035. That’s a fast turnaround by any corporate measure, and it comes as solar is experiencing huge advances in technology and new customer appeal, thanks to the reduced costs of installing the equipment, the reliability of the system and the solar co-ops and purchasing agreements that are making solar a smarter buy.
BP diversified its business and pursued cleaner energy long before the Gulf of Mexico oil spill in 2010 tarnished its image. Its latest investment in solar is a clear indication about where it sees the industry headed, and it sends a message that renewables can be both good for public relations and good for the company’s bottom line. Florida Power & Light and Duke Energy also are investing more in solar, but states such as Florida and the federal government should further encourage the industry and the market by reducing cost and regulatory barriers to alternative energies. If Big Oil can plan for a cleaner future, so can our elected leaders.