BP to Close Its Solar Business after 40 Years
The oil giant insists it remains committed to its alternative energy division, and is on track to invest $8 billion in green technology by 2015; the company says solar is too much of a commodity to make a profit. Read More
BP has confirmed that it plans to close its solar energy division after more than 40 years, arguing that the growing commoditisation of solar technologies has made it impossible to make a profit.
Mike Petrucci, chief executive of BP Solar, said in an internal email to staff last week that the company has no choice but to close a division that has become unprofitable.
“The continuing global economic challenges have significantly impacted the solar industry, making it difficult to sustain long-term returns for the company,” he wrote.
A BP spokesman told the Financial Times that the company has decided that it cannot compete with the glut of low cost panels that has emerged in recent years.
“Over the last six months we have realised that we simply can’t make any money from solar,” he told the paper. “It has become a commoditised business. You cannot be a specialist anymore.”
The move, which is expected to affect around 100 employees around the world, provides further evidence of a shake out in the solar sector after high-profile US manufacturer Solyndra filed for bankruptcy and Germany’s Solon filed for creditor protection last week.
BP said that it will now look to offload solar projects with around 160MW of capacity, although the company was quick to stress that it remains committed to expanding its wider Alternative Energy division, which is now primarily focused on wind energy and biofuels.
BP has invested $7 billion in alternative energy projects since 2005, and remains on track to meet its target of investing $8 billion in the sector by 2015.
The move is unlikely to derail the rapid expansion of the solar sector. Western solar developers are facing growing competitive pressure from low cost imports of solar technologies from China, but falling panel prices has resulted in a surge in new installations.
As a result, a number of high-profile investors are now moving in the opposite direction to BP. Warren Buffett’s MidAmerican Energy Holdings announced earlier this month that it plans to buy a $2 billion Californian solar project, and Google confirmed only yesterday that it will invest $94 million in four new solar farms.
One of BP’s main rivals, French oil giant Total, also acquired a majority stake in US solar manufacturer SunPower Corp earlier this year.
This article originally appeared on BusinessGreen.
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