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The sun may finally be setting on Beyond Petroleum. Remember that? It was BP's big push into renewable energy under former chief executive officer John Browne. By putting its U.S. wind farm business up for sale this week, the company may be telling the world that an oil and gas producer has no business being in the power generation business, which is where investing in solar or wind power inevitably leads. BP is right to sell, though the $1.5-billion (U.S.) or so the wind farms are likely to fetch (and that may be optimistic) would be a poor return on an investment that may have cost it up to $4-billion.
Alternative energy sources such as wind and solar power were once the buzz words in the global climate-change and renewable-energy debate. BP outlined an investment plan in 2005 to invest $8-billion in alternative energy by 2015. About half of that was spent on wind farms, building a business from scratch, mostly in the U.S.
But the financial crisis caused a rethink. Climate change is no longer a political priority; it is unsurprising that it is no longer a commercial priority, either. BP closed its solar energy unit in 2011. The U.S. company Solyndra went out of business. Wind turbine producers are struggling – look at the travails of Danish-based Vestas Wind Systems.
Wind and solar energy are increasingly, and properly, the province of utilities. Indeed, utilities may well be buyers of the assets BP has put on the block. Several of the wind farms are joint ventures between BP and specialist power generators and alternative producers such as Sempra Generation, Infigen Energy and Dominion Resources.
BP is not done with alternative energy: it has a growing biofuels unit. But that is oil, part of its core business. Going "beyond petroleum" ought not to involve overturning a company's inherent business logic.