Lightsource Sets Sights on Global Markets After Stake Sale to BP

(Bloomberg) -- The U.K.’s largest solar company has set its sights on becoming a global player now that it’s owned in part by one of the world’s oil majors.

“Going forward, this industry will move forward from a cottage industry almost, to an industrialized industry,” Chief Executive Officer Nick Boyle said in an interview. “There will be a small number of worldwide players. We have aspirations to be one of those players.”

BP Plc bought a 43 percent stake in Lightsource Renewable Energy Ltd. for $200 million late last year, marking a turnaround in the oil company’s clean energy strategy. Along with almost all of its peers, BP has dabbled in renewables since the 1970s, but few of the businesses they set up were successful. Now they’ve changed tack and are shopping for companies with interesting technologies and proven track records.

A few months after the deal closed, plans are starting to take shape. This partnership means that Lightsource BP, as it’s now known, can widen its horizons and raise its ambitions. Since the acquisition, the company has moved into markets where BP has a strong presence such as Egypt. It’s also currently considering Brazil.

The developer is targeting to build 6 gigawatts of solar in the next five years. That’s the equivalent of five conventional nuclear reactors and would quadruple the size of their current portfolio. The majority of Lightsource’s projects under development are expected to be built without any government support, according to Kareen Boutonnat, chief operating officer. They haven’t completed a solar farm like that yet.

“We have a massive pipeline of projects like this,” Boutonnat said. “We would not go into a country with subsidies because we don’t think you can control it ultimately.”

State support programs for clean energy are being rolled back around the world as solar panels and wind turbines become cheaper. Rather than fixing a price with a government, developers are now either selling their electricity on the wholesale power market or signing supply contracts with large consumers.

Lightsource’s current focus is on the latter but it eventually expects be able to build projects that will sell electricity at a prices based on day-to-day fluctuations in the market, taking what is known as merchant risk.

Its new shareholder may give the developer an edge. Royal Dutch Shell Plc and Vitol Group have said that they expect that their experience with shifting oil prices can translate to an advantage in building renewables projects that aren’t state supported.

“Oil companies are comfortable taking merchant risk in the sector due to the relative size of their renewables investments and their experience with volatile oil prices,” said David Doherty, analyst at Bloomberg NEF. But “oil major investments in renewables to date have been small in terms of their total capex.”

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