BP to hold on to its renewables

Cleantech is getting another chance at London-based BP (NYSE: BP). The world's third largest oil company has decided not to spin off its investments in renewable energy, which includes interests in solar, wind and biofuel.

Tony Hayward, CEO of BP, said in the company's second quarter conference call that "we are creating value in Alternative Energy. These businesses are increasingly economic without subsidy and we will continue to provide visibility on our investments and the value that's being created."

In February, Hayward hinted that he might be considering a sale of the company's alternative energy business in a strategy update he gave to analysts (see BP may sell renewables business).

At the time, Hayward said the equity value of its Alternative Energy unit was between $5 billion and $7 billion. Selling off all or part of the renewables business would have reversed a major part of the company's strategy under former CEO John Browne.

Browne headed BP when the former British Petroleum rebranded itself using the slogan, "Beyond Petroleum." Hayward took over the oil company in May 2007.

In April, BP announced plans to take a 50 percent stake in a sugarcane biofuels project that's building two large refineries in Brazil (see BP taking stake in Brazil biofuel).

BP said it would pay $60 million for the stake in Tropical BioEnergia, a joint venture established by Santelisa Vale, a Brazilian sugar and ethanol producer, and Maeda Group, which grows cotton and manufactures vegetable oil.

"We have a significant and unique growth option in our Alternative Energy business," said Hayward. "Our challenge is to expose that value for the benefit of BP's shareholders."

Vivienne Cox, head of the company's Alternative Energy unit, said that they've been looking at a range of options to give more transparency in its renewables holdings.

"We've looked at IPO options, we've looked at partnership options, we've looked at other options. We've decided that at this point we will keep the businesses inside BP," she said.

Cox said BP will open up more information for investors on its Alternative Energy unit in February 2009.

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