BP seeks partnerships to navigate the renewable energy storm. BP (BP.L.) is looking for partners for offshore wind projects in Japan and may invest in hydrogen technology businesses to combat the inflation and equipment constraints plaguing the renewables industry.

In pursuing a long-term economic model that can endure the worldwide shift away from fossil fuels, the giant oil company has ambitions to increase its involvement in low-carbon energy in the following decades. Specific investors have criticized the approach because it shifts BP’s focus away from greater profits for oil and gas companies.

However, Anja-Isabel Dotzenrath, who heads up BP’s renewables division, told Reuters that it was “time to deliver” and that looking for partners in Japan, which was recognized as one of the countries with the most potential for expansion, was part of the answer.

At the beginning of this month, she stated that the offshore wind business in the United States was “fundamentally broken” after BP wrote down $540 million on its wind power projects located offshore of New York. She attributed this loss to inflation and red tape, which caused projects to go over budget and schedule.

Slow permitting, technological problems, increased raw material costs, and more significant costs of finance have all combined to impede progress in the renewables industry on a global scale.

BP’s renewable partner, Norway’s Equinor (EQNR.OL), also took a similar $300 million impairment, while Denmark’s Orsted (ORSTED.CO), the world’s No. 1 offshore wind project business, abandoned two local projects and incurred billions of euros of writedowns. Both companies are based in Norway.

Dotzenrath added that BP was figuring out how to minimize costs internationally as part of its effort to guarantee that it will be able to fulfill its internal returns objective of 6% to 8% on renewables projects.

“Of course, inflation is not just an issue for projects in the U.S.A.,” stated the representative. “We are also trying to reduce costs in other regions using various levers, for example, through optimized purchasing strategies, which may also lead us to invest directly in the supply chain.”

PARTNERSHIPS IN WIND AND BEYOND [CLARIFICATION]

Dotzenrath added that the BP group aims for three to five clusters of four to eight gigawatts each in the global offshore market. He specifically mentioned Japan, where BP will likely collaborate with local utilities.

If you want to succeed in Japan, you must find a Japanese business partner. She explained that to move forward with the permission procedures and create the onshore grid connection, you would want the assistance of one of the local energy suppliers.

Dotzenrath, who, prior to joining BP, led the renewables division of Germany’s leading utility RWE (RWEG.DE), stated that partnerships were essential to tackling a bottleneck that has also become an issue in the hydrogen industry, which is another area BP has prioritized for future growth. Dotzenrath joined BP last year.

Dotzenrath stated that BP does not build electrolyzers that divide water to create hydrogen, but he did not rule out BP’s involvement in a higher capacity.

“This could mean, for example, that we’ll become an anchor investor in a leading technology manufacturer that is building a production plant for electrolysers,” added the executive.

Germany, which is hoping to play a significant role in the emerging hydrogen market under the leadership of Chancellor Olaf Scholz, is home to some of the leading manufacturers in the field, including Thyssenkrupp Nucera (NCH2.DE) and Siemens Energy (ENR1n.DE), among others.

BP outbid local heavyweights BASF (BASFn.DE), EnBW (EBKG.DE), and RWE in this year’s offshore wind auction, which drew criticism from competitors who felt they could not compete with cash-rich energy giants. It is also where the auction took place.

“I can understand why other people who participated in the market would have also wanted to win. “But sometimes you win, and sometimes you lose,” Dotzenrath added. “That’s the way life is.”

BP intends to spend up to $65 billion on renewable energy, hydrogen, biofuels, and electric mobility between 2023 and 2030. This would account for half of the company’s investments by the end of the decade, increasing from the current 30 percent percentage in 2022.