BP is making its first major investment in wind power with a joint venture that will lead to an exponential expansion of its generating capacity.
The oil giant said yesterday it had entered a five-year supply and development agreement involving five wind energy projects in the US with Clipper Windpower.
The news sent Clipper shares up 80p, or 28 per cent, to 362.5p in London. The projects, with an anticipated total generating capacity of 2,015 megawatts, are situated in New York, Texas and South Dakota.
BP has also secured a mix of firm and contingent orders of up to 2,250 megawatts of additional Clipper turbines in its global wind portfolio, the companies said.
BP launched an Alternative Energy division to focus on solar, hydrogen and wind power but its wind operation was confined to two projects with a combined output of 31 megawatts.
Steve Westwell, the chief executive of BP Alternative Energy, said: "We believe the Clipper turbine is a breakthrough in reducing the total cost of renewable energy and we are pleased to be the first large customers for this innovative technology."
James Dehlsen, the chief executive of Clipper Windpower, said it may be able to announce further orders at its shareholder extraordinary meeting.
The announcement, which came in the same week that the UK Government published its Energy Review, is thought to be the biggest single investment in wind power.
According to an industry benchmark, it is understood that it takes $1m (£540m) of investment to produce a megawatt of windpower. On that scale, yesterday's project could be valued at $4bn, although BP declined to comment.
As part of the long-term turbine supply agreement, BP Alternative Energy has committed to the purchase of 100 megawatts of Liberty turbines in 2007 and 200 megawatts in 2008 which it will use on other projects in BP's global wind business.
These orders represent the initial firm deliveries under the long-term supply agreement for up to 900 Liberty turbines over the next five years.
BP said that in recognition of the long-term strategic relationship between the two companies, it had acquired a five-year share option for a 10 per cent equity interest at 377p a share in Clipper.Reuse content