Solar Power Profitability: BP Solar
May 24, 2005 — By Paul Geary, ENN
For many years the benefits of solar power have been offset by the reality that solar power companies find it difficult to be profitable. Many theories have been put forth to explain this, ranging from blaming oil companies for self-perpetuation by shutting solar out of the market, the renewable nature of solar power, and bad marketing strategies on the part of solar power entities. However, BP Global, the huge energy company formerly known as British Petroleum, has announced that its solar power subsidiary, BP solar, was profitable in 2004. Though a major fossil fuel concern, BP has made a commitment to solar power.
BP has been involved in solar power since 1973. Its subsidiary, BP Solar, is now one of the world’s largest solar power companies with production facilities in the United States, Spain, India and Australia, employing a workforce of over 2,000 people around the world. In its operations, BP Solar concentrates on the production of solar cells and modules in order to produce electricity. Over the last five years, BP International invested 500 million US dollars in this high growth, but relatively small business segment.
Steve Westwell, Head of BP Solar and Group Vice President in the International BP Group says that “solar power has an immense growth potential for the future, due to technological progress and therefore greater efficiency in transforming the energy inherent to sunlight. At the same time, prices will fall as the market penetration increases, demand grows and targeted support is provided by marketing and legislation.”
He cautions though that solar power probably won't have a significant positive impact on global climate change until 2020. "All of the renewable energy sources, including solar power, currently account for just 2.5 % of the global demand for energy,” according to Westwell. However, industry growth in 2004 was 40%, and more than 1,000 megawatts worth of power production was installed around the world. Prices fall each time supply is increased.
Despite its small size relative to the fossil-fuel industry, solar is making a significant impact in some parts of the world.
BP has a program to help remote communities develop by providing solar power for vital equipment such as school lights and refrigeration facilities for medicines and vaccines. solar power can offer a lifeline to remote rural communities in the developing world that have little chance of being connected to an electricity grid, but are exposed to a lot of sunshine. BP is involved in ‘off-grid’ projects in countries such as Malaysia, Thailand, the Philippines, India, Angola, Zambia and Brazil.
Some are substantial programmes which bring power to thousands, while others are demonstration projects or prototypes which show communities and governments what can be achieved.
For instance, in the Philippines, the Solar Power Technology Support project is being jointly undertaken by the Philippines and Spanish governments to bring electricity to around 40 communities. The project will provide lighting in schools, water pumping for clean drinking water, and vaccine refrigeration. The SPOTS Project will positively impact about 400,000 people in the most isolated regions of Mindanao.
In Angola, the Paranhos Solar Pilot Project, funded jointly by BP Angola and the UK Government, provides energy to a village of 360 people 60 kilometres north of Luanda. Launched in June 2004, the project is helping the area recover from the recent war by providing energy to community buildings including the school and medical centre - including a vaccine refrigerator, as well as lighting for houses, a water pumping system and street lighting.
BP is the world's largest oil concern (ahead of ExxonMobil) with revenues of about $285 billion in 2004. It's the world's second largest company in sales, just behind WalMart. Source: BP p.l.c., BP Solar, Hoover's
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