In the latest demonstration of the changing landscape of the offshore wind energy sector, UK-based energy giant BP reported it will merge its interests with Japan’s power generation company JERA, a joint venture between Tokyo Electric Power Company and Chubu Electric Power. Combing the assets of the two companies into a new standalone joint venture they said would create a top five company while also bolstering access to competitive financing.
BP has been active in the offshore wind sector since 2019 but earlier this year signaled its intent to slow its efforts. The company does not have operating wind farms but has a pipeline of 9.7 GW, including 5.7 GW of development projects and a further 4 GW of leases. It will contribute its interests in projects in the UK and Germany and leases off Scotland and the U.S. East Coast to the new joint company.
JERA has been in offshore wind since 2019 developing projects in the UK and Taiwan. Last year, it acquired Parkwind, a developer based in Belgium. It owns and operates wind farms in Belgium, Germany, Japan, and Taiwan with a development portfolio for projects in Japan, Ireland, and Australia.
“Offshore wind has significant potential and is a critical component of the energy transition,” said Yukio Kani, CEO of JERA announcing the new company which will be known as JERA Nex BP. “The sector is at an inflection point, and we believe the transformative partnership launched today between our two companies combines the resources, capabilities, and network necessary to be a world-class offshore wind company, and in doing so, realize the potential of offshore wind globally, while positioning this business for long term success.”
The combined company will be based in London with a CEO to be named by JERA and a CFO to be named by BP. The combination of JERA’s operating projects and both companies’ pipelines will give JERA Nex BP a potential current portfolio of 13 GW. They said the new company intends to accelerate development while also providing access to competitive financing. JERA and BP also agreed to provide capital funding for investments committed to before the end of 2030 of up to $5.8 billion.
BP said the new company would build on its successful cooperation with JERA while providing a “capital-light model” for BP shareholders. In June 2024, it was reported that BP halted new offshore wind projects as it sought to bolster its financial performance. The new company with JERA is expected to launch by the third quarter of 2025.
Shell similarly last week also announced internally according to a report from Reuters that it would be slowing its efforts in offshore wind development. The company reportedly said it would continue its current portfolio and look for roles in offshore wind while not initiating new projects.
While offshore wind continues to play a major role in the plans for lowering carbon emissions and the energy transition, the industry continues to experience challenges. Developers have pointed to the financial pressures, including the impact of higher interest rates and prolonged license processes, as well as supply chain problems. Other major developers including Ørsted and Vattenfall previously repositioned portions of their portfolio but the private equity portfolios have shown increased interest in investing in projects.
