BP Gives Up on Solar Power

Published February 2, 2012

BP, an energy company that won praise from environmental activists after adopting the slogan “Beyond Petroleum” while investing heavily in solar power, is shutting down its 40-year-old solar business after executives decided solar power production is not economically competitive.

The company had been scaling back its BP Solar operations since 2008.

“BP’s goal is to profitably grow in specific segments of the energy industry,” said Daren Beaudo, a BP spokesman in the company’s U.S. press office in Texas. “As part of this strategic focus, a decision has been made to exit the solar business. As a result, BP Solar has ceased development of future solar energy projects and is beginning the orderly wind down of its operations.”

The move is expected to impact about 100 employees.

“Over the next several months, BP Solar will complete key projects currently in development and take the steps necessary to transition its obligations and some assets to other BP businesses or to third parties as required,” Beaudo added. “The BP Solar workforce will gradually wind down, as we complete the business transition process.”

Overcapacity, Lower Subsidies
BP’s departure from the solar market comes amid growing competition from China, overcapacity, lower government subsidies, and projected competition from new investors.

“This decision was very difficult given the company’s nearly 40-year history in solar energy,” he said. “However, the major global solar markets continue to experience tremendous challenges, which ultimately led the company to make this decision.”

BP will continue its solar equipment partnership with Tata Power Co. in India, company executives announced. BP has a 51 percent share of Tata, which is the third-largest solar cell and panel maker in India.

Solar Power Not Competitive
To some, BP’s departure from solar power is hardly a surprise. Industry analysts have been warning for years the market is not feasible in terms of cost-effectiveness, and is more driven by environmental agendas, government subsidies, and feel-good motives than reality-based economics.

“From a commercial perspective, solar power has been a total failure, both too expensive and too impractical to appeal to a wide market,” said Matt Patterson, editor of Green Watch at the Capital Research Center and the current Warren Brookes fellow at the Competitive Enterprise Institute.

“In fact, the only reason a solar panel industry exists at all is because governments mandate their use and subsidize their production. And even then, solar cannot begin to compete in an open marketplace against the reliability and low cost of fossil fuels.”

Cheryl Chumley ([email protected]) writes from northern Virginia.