Tomorrow marks one year to the day since BP announced a US$200 million (£148 million) investment in solar developer Lightsource, in a move which saw the energy giant return to the solar sector by picking up a 43% stake in the London-based firm.
In truth, as Lightsource BP chief exec Nick Boyle tells Current±, the deal was agreed a few weeks previous, but the 12 months (and two weeks) since 15 December 2017 have been nothing short of transformative for the company.
BP’s interest in Lightsource first crystallised within an external funding opportunity which was led by Rothschilds. Lightsource sought external investment to ramp up its growth expectations, and Rothschilds returned with 14 interested parties separated into two lists; investors, and so-called strategics. Among those strategic firms were BP and another oil and gas giant, with BP eventually coming out victorious.
In the year that’s followed, Boyle and chief operations officer Kareen Boutonnat have insisted that it remains business as usual, “but with a capital B”, as Boyle puts it. He says BP has “been a breath of fresh air” and has brought to the table other elements that the company may have previously lacked.
“If we compare what BP is like to what our previous [funders] were like, there is no comparison. They just have this very can-do, empowering mentality that suits us perfectly,” Boyle says. And there’s an abundance of evidence to support Boyle’s argument.
New markets and new hires
Through its involvement in the firm, BP has been able to fling open doors that Lightsource would’ve otherwise struggled to move by an inch. Since last December operations have been opened in Egypt and Brazil amongst others, and the company is now active in 11 jurisdictions worldwide. Lightsource BP still looks at the world in much the same way that it previously had, but now with an additional “BP lense” that lifts its ambitions.
It’s an advantage that other solar developers are simply not privy to, but one Boyle is not shy about taking up. “There’s nothing like an unfair advantage. Why would we go to a market where BP aren’t, when we could go to a similar where they are, and get afforded all of that extra support,” Boyle says.
BP is evidently opening doors not just in new markets but, as Boyle puts it, “those two letters on the end of the name just completely change the way individuals read what they’re doing”. Suddenly, government-backed energy offtakers and bankable counterparties alike are keener to do business.
And fresh business brings fresh growth. In the past year Lightsource BP’s headcount has risen by around 20%, and there’s still - at the time of writing - another 64 vacancies to fill. This itself is causing something of a headache for the firm’s HR team, one that’s been somewhat exacerbated by the level of interest the company is now generating from would-be hires. Boutonnat explains how whereas in the past there may have been eight applicants for each role, there’s now 75, and the calibre of talent approaching the business has soared since the BP announcement was made.
Boyle is straightforward in his assertion that the two letters at the end of the name make Lightsource BP a “sexier proposition” than before. Boutonnat is perhaps a little more nuanced in her argument that it’s BP’s globalisation that brings people to the seventh floor at 33 Holborn, and the sense that, in pursuing markets where subsidies are not granted or required, Lightsource is more “in charge of its own destiny” than it was before.
Industrialising a cottage industry
Lightsource BP, like most, if not all, solar developers in the UK active since 2015, endured some troubled times as the Conservative axe fell on a whole range of subsidies following their election in May 2015. The company’s pipeline shrank and more than 50 jobs were lost after the firm completed a reconsideration of its direction in the aftermath.
Boyle says Lightsource BP has continued to flourish in such adversity as a result of always being willing to push the boundaries of what was thought possible. “I remember speaking at one of your [Current± publisher Solar Media] conferences in 2011 and I stood up and announced that Lightsource was going to do 300MW, and there wasn’t anyone in the room that wasn’t on the floor laughing. And yet, that’s exactly what we did.”
Boyle puts these achievements not just to thinking outside of the box, but by industrialising and introducing “real business systems, controls and processes” to what was essentially a cottage industry when he founded the business in 2010. “I was talking to Accenture recently. They were doing a survey of developers, and what types of systems and processes they have in-house, and they were very surprised by the way we run things,” Boutonnat adds.
That’s not to say there isn’t anything that BP hasn’t introduced to Lightsource on a professional level. Research and development spending and scope has increased since last year, and Lightsource Labs - the main element of a wide-ranging R&D arm that spans from Greece to Palo Alto - now examines everything from a 10-year range, something which Boutonnat described as a “big step” for the company. Floating solar, bifacial modules and the central versus string inverters debate sit on Lightsource BP’s immediate R&D list at the moment.
There is, too, a strong focus on optimising the actual use of electrons both in the home and in C&I applications, something which stems from a solar, storage and home energy management system pilot launched alongside EDF two years ago dubbed Sunplug. Lightsource BP still manages the portfolio of installs in the UK, but sees this market as a longer-term play, usurped by markets like Australia - where Lightsource BP has concentrated a not insignificant amount of resource - as the country’s energy market battles spiralling network costs.
For a company that has extensive experience in developing, managing and operating huge amounts of renewable power generation, coupled with an R&D arm developing new domestic energy management systems and, now, the backing of a major utility, it’s perhaps an easy assumption to make that Lightsource BP might have vertical integration on its mind. The UK’s supply market is richly competitive - handfuls of Ofgem licensees have gone bust in recent weeks and not even innogy can make head nor tail of it - but new, digital-minded entrants have found success in a market desperately in need of innovation.
But Boutonnat insists the firm has no such ambitions, with Lightsource BP considering it more rewarding to go worldwide with what they do now than to “go deeper” in any one jurisdiction. BP has evidently lit something of a fire under Lightsource’s global ambitions, but not - at least not yet - given the firm aspirations of a more entrenched role in the energy market.
A symbiotic relationship
Within 45 minutes at Lightsource BP’s Holborn office, the same home it’s had for four years now, the impact BP’s presence and position in the company has had is evident. But far be it from this to be a one-way relationship.
It would’ve been easy to accuse BP of greenwashing. After all, US$200 million is short change for a company whose total group profits for the 2017/18 financial year topped $2.5 billion. Boyle, predictably, doesn’t buy the greenwashing argument, but has good reason not to.
Lightsource is routinely mentioned within BP’s messaging and Boyle says this is all down to the majority of oil and gas companies realising that energy markets are changing worldwide.
“Yes, the market for energy worldwide is growing, but electricity as a subset is outpacing that in terms of its percentage. PV is, in 60% of those countries… the cheapest form of electricity generation. It might not be perfect in every case – it’s not trying to be – it’s trying to be part of the mix,” he says.
Boyle insists that it is therefore common sense that O&G firms are getting involved in solar, describing it as a “natural progression” for the organisations. That much is borne out from watching developments in the market that have followed BP’s own move. Shell snapped up US developer Silicon Ranch mere weeks after the Lightsource BP deal was announced, and both Orsted (formerly DONG) and Equinor (formerly Statoil) have spoken of solar ambitions. Far be it from us to remark that a fossil fuel company may have blazed a trail, but the new direction of travel is stark.
And the relationship between BP and Lightsource has however gone further, and is now more symbiotic than anything else.
“It would be completely inappropriate for us to get all the upside and them to get some greenwashing. This is about, from a business perspective, both of us winning. BP is a more rounded company because of what solar can do, and we’re a more rounded company with much, much further reach because of the relationship we have with BP and all that affords us,” Boyle says.