BP & Equinor Demand Offshore Wind Power Price Increases
BP Plc BP and partner Equinor ASA EQNR are demanding a 54% hike in electricity prices produced at three offshore wind farms in the United States, per a Reuters report.
The companies obtained the rights to develop the Empire Wind 1, Empire Wind 2 and Beacon Wind farms offshore New York. They are expected to have a combined capacity of 3,300 megawatts, which can power millions of homes.
In June 2023, BP and Equinor filed a petition with the New York State Public Service Commission to modify the power purchase agreements for three projects being developed due to inflation and interconnection costs.
Several projects were awarded, and spikes in inflation forced energy companies to hedge equipment and labor at much higher prices than expected. The projects may no longer be financially viable if regulators fail to update prices, which can lead to delays in addressing clean energy targets.
The strike price for Empire Wind 1 would rise from $118.38 per megawatt hour (MWh) to $159.64 per MWh and for Empire Wind 2 from $107.50 per MWh to $177.84 per MWh. Beacon Wind would witness the strike price increase from 118.00 per MWh to 190.82 per MWh.
BP and Equinor cited that high inflation, supply-chain disruptions and rising interest rates from the coronavirus pandemic, the Russia-Ukraine war, and the growing urgency to reach energy transition goals significantly raised costs.
The proposed price amendments would increase consumer costs for the three projects by $14.8 billion over a 30-year contract term.
BP has a strong portfolio of upstream projects, backing impressive production growth. BP has set an aggressive energy transition plan to capitalize on the mounting clean energy demand. By 2030, it plans to reduce emissions from operations by 30-35%.
BP currently carries a Zack Rank #5 (Strong Sell).
Some better-ranked players in the energy sector are Core Laboratories N.V. CLB and Sunoco LP SUN, currently carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Core Labs’ strong presence in the emerging shale plays and its global footprint will provide for steady growth rates going forward. CLB’s technology-heavy portfolio of proprietary products and services gives it the opportunity to optimize production from new and existing fields.
Core Labs has witnessed upward earnings estimate revision for 2023 and 2024 in the past 30 days. The consensus estimate for CLB’s 2023 and 2024 earnings per share is pegged at 88 cents and $1.17, respectively.
Sunoco is among the biggest motor fuel distributors in the United States wholesale market in terms of volumes. For 2023, the partnership expects an adjusted EBITDA of $865-$915 million.
Over the past 30 days, Sunoco has witnessed upward earnings estimate revisions for 2023 and 2024, respectively. The Zacks Consensus Estimate for SUN’s 2023 and 2024 earnings per share is pegged at $4.37 and $3.81, respectively.
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BP p.l.c. (BP) : Free Stock Analysis Report
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Equinor ASA (EQNR) : Free Stock Analysis Report
