In an ironic twist of fate, BP plc (ADR) (NYSE:BP) has put up the “for sale” sign on its $1.5 billion of wind farms to help pay for its 2010 oil spill. Is BP’s sale short-sighted, or does the energy company know something others don’t? Let’s look at wind energy, who has it, and whether wind will propel your portfolio to profits.
BP winds down wind
As part of its larger $38 billion garage sale, BP plc (ADR) is in the process of selling off 16 wind farms across nine states. With a total generating capacity of 2,600 MW, this move is far from small peanuts for a company that famously renamed itself “Beyond Petroleum” in 2000.
But with $300 billion in assets, wind is hardly the winner that BP needs to succeed. The streamlining will help it focus on high-margin oil production and exploration, its bread and butter (excepting environmental disasters). As margins tighten and the global economic recovery continues to ooze along, it makes sense for energy companies to focus on what they do best. And for some utilities, what they do best increasingly includes wind.
When investors talk wind, NextEra Energy (NYSE:NEE) is the elephant in the room. Its 100 wind farms generate more than 10,000 net MW of electricity, accounting for 56% of the utility’s total generation capacity.
Exelon (NYSE:EXC) gets pigeonholed as a nuclear play, but its wind assets provide a significant portion of its assets. The utility operates 44 wind farms totaling nearly 1,300 MW of generation capacity, and it spent $650 million in 2012 on wind capital expenditures.