KEY POINTS

  • Empire Wind has a potential total installed capacity of more than 2 GW
  • The power generation from each site would be sufficient to power more than 1 million homes
  • Equinor has committed to increase renewables capacity to 4 to 6 GW by 2026

Two of Europe’s largest oil companies will develop offshore wind projects jointly in the U.S. in yet another example of energy giants migrating towards the development of renewables.

Equinor (EQNR) of Norway said it has entered into an agreement to sell a 50% stake in two of its U.S. offshore wind projects to Britain-based BP (BP) for $1.1 billion.

The transaction is expected to close in early 2021.

The two projects – Empire Wind and Beacon Wind – are located off the coast of New York state and Massachusetts, respectively.

Under this deal, Equinor and BP will form a strategic partnership to develop more offshore wind endeavors in the US.

Empire Wind, located just southeast of the Long Island coast, spans 80,000 acres, with water depths of between 65 and 131 feet. The site has a potential total installed capacity of more than 2 gigawatts, or GW.

Beacon Wind is located 20 miles south of Nantucket, Massachusetts,  and covers 128,000 acres. It  has the potential for total capacity of more than 2.4 GW.

The power generation from each site would be sufficient to power more than 1 million homes.

Equinor, which is majority owned by the Norwegian government, will remain the operator of these projects through the development, construction and operations phases. Eventually the wind farms will be equally staffed by Equinor and BP.

The deal is part of its “renewable strategy” to access “attractive acreage early and at scale, mature projects, and capture value by de-risking high equity ownership positions,” Equinor said.

“We look forward to working with BP who share our strong ambition to grow in renewable energy,” Equinor Chief Executive Officer Eldar Saetre said. “Our partnership underlines both companies’ strong commitment to accelerate the energy transition and combining our strengths will enable us to grow a profitable offshore wind business together in the U.S.”

Pal Eitrheim, Equinor’s executive vice president for New Energy Solutions, said this partnership reflects Equinor’s “ability to create value from developing offshore wind projects.”

Equinor has committed to increase renewables capacity to 4 to 6 GW by 2026 and 12 to 16 GW by 2035. Equinor’s wind projects are currently focused on the North Sea, the U.S., and the Baltic Sea.

Equinor commissioned the world’s first floating offshore wind farm in 2017 off the coast of Scotland.

For BP, the deal marks its first major foray in offshore wind projects and forms an important step in its stated goal of having developed 50GW of renewable power by 2030.

(BP already has a significant onshore wind business in U.S., operating nine wind farms in six states).

“Offshore wind is growing at around 20% a year globally and is recognized as being a core part of meeting the world’s need to limit emissions,” said Bernard Looney, BP’s chief executive officer. “Equinor is a recognized sector leader and this partnership builds on a long history between our two companies. It will play a vital role in allowing us to deliver our aim of rapidly scaling up our renewable energy capacity.”

According to the American Wind Energy Association, the development of 30,000 megawatts of offshore wind along the East Coast could support the creation of up to 83,000 jobs and generate $25 billion in annual economic output by 2030.

“Offshore wind is key to the future of clean energy development in the U.S. and will add to a thriving wind power industry that already represents the largest source of renewable energy in the country,” AWEA CEO Tom Kiernan said. “The offshore wind industry will create tens of thousands of jobs and provide billions of dollars to the economy, while delivering on its enormous untapped potential to power major population centers up and down the East Coast.”