BP quits unprofitable solar business

After a difficult year for the solar industry BP has announced it is leaving the building, shutting its business down due to dwindling profits.

The industry has been staggering under the weight of a huge oversupply and many firms have been struggling to make profits as module costs continuing to drop.

With countries such as China producing cheap as chips products on an enormous scale it seems that there is little room for BP, which has decided to get out while the going’s good after 40 years in the business.

An internal memo was obtained by the Financial Times which showed that bosses had finally given up on making a profit in the business.  According to a spokesperson this was due to the commoditisation of the industry, where once BP invested in solar tech as a specialist.

BP’s solar business had been struggling to make ends meet for some time, and had been swinging the axe to cut ranks in staff for a couple of years. An attempt by Intel to enter the market also met a sorry end earlier this year.

Despoiler of cute sea creatures BP will, however, seek to keep its alternative energy source projects going in other areas.

While there has been much doom and gloom in the solar industry in the past months, with governments also cutting subsidies in various countries, there is still enthusiasm in some quarters for turning a buck.

Google announced that it will continue to invest cash in solar energy programmes in the US, joining up to four solar projects in California with a $94 million spend.  This brings Google’s total expenditure up to $915 million on renewable energies, with the search giant also conducting financing schemes to put more PV panels on the roofs of thousands of homes across the country.

Foxconn signalled that it sees potential in the industry to rebound, whacking $30 million into development, with speculation that it could be part of a $1.5 billion investment into solar in the future.

According to Taiwan Economic News, the venture in mainland China will see Foxconn team up with the government and GLC Holdings to set up a plant to come online early 2012.  It seems that if this goes well there, the conglomerate will splash some big cash on future solar deals.

Solar industry analyst at IMS Research, Sam Wilkinson, told TechEye BP’s decision to quit the solar business is indicative of the poor state of the market: “BP’s decision is a clear indicator of the challenges that PV module suppliers face in remaining profitable in the current industry conditions.

“PV module manufacturing capacity has hit 50 GW this year, despite demand reaching just 24 GW. The resulting oversupply has put huge pressure on prices, and average prices are now 44 percent lower than they were one year ago. Average gross margins are now in the single digits, with most suppliers now making net-losses on their operations.”