Oil giant BP to exit the solar sector as numbers fail to add up

Oil giant BP is preparing to exit the solar industry entirely, saying the sector cannot deliver sufficient returns.

The UK-based energy group will wind down its BP Solar unit and sell-off the stakes it has in various projects around the world.

A document announcing the decision to the 100 or so employees (including 36 in the US) who will be affected says changes in the solar industry have left BP unable to achieve sufficient margins in the sector. The workers were notified last week.

"BP’s goal is to profitably grow in specific segments of the energy industry," says a BP spokesman in the US. "However, the major global solar markets continue to experience tremendous challenges, which ultimately led the company to make this decision."

A BP spokesman in the UK adds that the company had determined over the last six months "that we can't make solar viable for BP".

Adam Browning, executive director of the California-based Vote Solar Initiative, an independnet group advocating for pro-solar policies, called it "a sad day, as BP has had a long history in the space".

"I'd say that it speaks to the maturation of the industry," Browning says. "There's a lot of extremely focused and very nimble single-purpose companies executing at a high degree of efficiency. Large conglomerates can't assume that their brand and balance sheet is enough to carry the day."

BP is halting solar development and it intends to complete key projects and "transition its obligations and some assets to other BP businesses or to third parties as required", the US spokesman says.

BP will engage with its various solar partners around the world and would aim to exit projects "in a way that leaves them viable", the company says.

The company's portfolio includes a recently completed 37MW project at Brookhaven National Laboratory on Long Island, New York, owned jointly by BP Solar and Met Life.

It is also involved in the proposed 150MW Moree PV development in Australia, one of the country's Solar Flagships projects.

The UK group had already pulled back from module manufacturing to concentrate on project development.

In July it shut its factory in Maryland, US – first opened by Solarex in 1982 – ending a process that saw some 460 US jobs cut over two years.

BP had earlier axed manufacturing capacity in Spain, where it first built a plant in 1985.

In an interview with Recharge in autumn 2010, Katrina Landis, chief executive of BP Alternative Energy said: “The Chinese have effectively commoditised manufacturing of PV panels. You simply cannot compete with China’s ability to produce PV panels that have the quality required to satisfy Western customers.”

BP’s interests in other clean-energy sectors, prominently wind-power in the US and biofuels, are unaffected, says the UK spokesman.

BP traces its start in solar as far back as Solarex, a company formed in 1973 to develop terrestrial solar applications from PV technology used on satellites. BP itself entered the solar industry in 1979 and merged with Solarex in 1999.

"This decision was very difficult given the company's nearly 40 year history in solar energy," says the US spokesman.