BP is touting on its website that it is one of the “world’s major manufacturers of photovoltaic solar panels, with more than 30 years of experience and installations in over 160 countries.” However, recent comments made by its CEO could mean that slogan is subject to change in the near future.
“[Solar power] is not going to make the transition to be competitive with more conventional power – the [technology] gap is too big,” said BP’s CEO Tony Hayward at an energy conference held by the Institute of the Americas in La Jolla, California.
BP has invested heavily in making solar cells and components, but in the past six months, it has been closing factories around the world with an announced sharp cut in its investment in alternative energy from $1.4 billion to $1 billion this year. At the World Future Energy Summit in Abu Dhabi held in January, Vivian Cox, head of BP’s alternative energy division, said that the company would invest $8 billion in less than 10 years in alternative energy, focusing on solar, wind, biofuels, and especially carbon capture and storage (CCS). However, she also admitted that as a result of the global financial meltdown, the company had to decrease some of its investments. “We have, as a consequence, made some decisions of areas of focus, meaning withdrawal from other areas.”
Hayward also said in a statement on BP’s site, “I don’t believe the world is running out of oil in the near or foreseeable future. The data shows that there are around 40 years of proved oil reserves left in the ground and 60 years of natural gas, at today’s consumption rates, not including unconventional hydrocarbons.” He continued, “When it comes to meeting demand, the problems are above the ground, not below it.”
Last year the company estimated that its solar business was worth up to $3.9 billion and said it planned to double its investment in the business in 2008 from $150 million in 2007. It set a target for sales of about 800 MW of capacity in 2010, up from 160 MW in 2008. However, it has since shut factories in Sydney and Madrid and cut production in Maryland. Manufacturing is being transferred to sub-contractors in China, giving BP the capacity to produce about double last year’s output if it can find customers, but the company no longer sets a target for solar sales.
Hayward said that in order to make the company’s investments effective and efficient, there needed to be a “step-change” in investment, research, development, and deployment of energy technology. “Carbon needs to be priced, preferably through cap-and-trade systems, so that its cost is included in everything from taking a train to turning on a light. There should also be transitional incentives that make low-carbon energy competitive with other energy sources, rewarding cost reductions and deployment at a scale,” he added.
Hayward also commented on the site, “We also invest a significant amount in alternative energy technology compared with our peers and, for us, the key question is which technologies will make the greatest contribution to meeting energy demand while providing BP with strong growth businesses.” It would appear that solar energy is no longer considered by the company as being a viable option to increase its portfolio, at least not as much as it had anticipated.