BP Solar is suffering a slow death that is hard to watch and reflects the cutthroat competition that marks an industry that used to be a lot more Pollyanna. The company is closing down and on Tuesday its joint venture partner, Tata Power, said it will buy out BP's share in their enterprise.
Tata said it will purchase the 51 percent BP had in their Tata BP Solar joint venture, which was formed in 1989 and makes silicon solar panels and offers solar system design services. Tata didn’t disclose the purchase price. The joint venture is among the top three solar cell and panel makers in India, according to GTM Research.
The deal gives Tata total control of an operation that could benefit from India’s emergence as a sizable solar market. India’s central government wants to see 20 gigawatts of grid-tied solar energy and 2 gigawatts of off-grid uses by 2022, and it launched an incentive program in January 2010 that has auctioned off projects. A few states in India also run solar incentive programs. All these efforts are recent, so whether India can hit its goals still remains a big question.
Although India promises to be a big market, most of the solar panels used in solar projects there have come from Chinese and U.S. manufacturers, such as First Solar and Suntech Power, said Tobias Engelmeier, managing director of Bridge to India, a consulting firm who recently completed a report on India for GTM Research.
Concerns about product quality and pricing are two reasons that many project developers haven’t clamored to use Indian-made solar panels, he added, though Tata and fellow Indian manufacturer Moser Baer have been developing projects domestically using their own panels. The national solar program does require the use of domestic silicon solar cells, but there is no rule regarding non-silicon cells, and that has made First Solar a big winner so far in this new market. The local content rule doesn’t apply to state-run programs, which also have benefit First Solar because of the company’s ability to supply lower-priced panels.
BP’s exit from the solar industry after some four decades shows how competitive and crowded the solar market has become. The company said it could no longer make money from solar given the inventory buildup and plummeting prices that have characterized the solar market this year. BP’s presence in the solar market has been shrinking in recent years. Back in late 2008, it nixed a plan to complete a silicon ingot factory in Maryland. It then announced a layoff of 620 workers and a closure of some of its production lines in the United States and Spain in early 2009. BP decided on an outsourcing model by hiring Jabil Circuit to make BP-branded solar panels, first in Poland and later in Mexico.
While the outsourcing model might have been a cost-effective one, it was put in place at a time when many manufacturers were quickly expanding their internal production capacities to gigawatt-scale in order to cut production costs. Then came the incentive policy change and the continuing weak economy in Europe, the largest solar market, that have turned 2011 into a dismal year for the solar manufacturing sector.
Many companies worldwide have closed factories, laid off hundreds of workers and filed for bankruptcies. Even First Solar, long the envy of its competitors, is now a subject of takeover speculation. Those who are still around have posted losses, and the difficulties of making a profit have sparked a trade complaint from some U.S. manufacturers against their Chinese rivals.
BP’s inability to out-innovate rivals also has something to do with its demise, according to Technology Review.
It was only a few years ago when solar companies used to talk about how the market was big enough for everyone to do well whenever they were asked about competition and the likely winners and losers. Indeed, the market is getting bigger, but it also is squeezing out a lot more players.
http://www.renewableenergyworld.com/rea/news/article/2011/12/indias-tata-power-to-divorce-bp-solar
Tata said it will purchase the 51 percent BP had in their Tata BP Solar joint venture, which was formed in 1989 and makes silicon solar panels and offers solar system design services. Tata didn’t disclose the purchase price. The joint venture is among the top three solar cell and panel makers in India, according to GTM Research.
The deal gives Tata total control of an operation that could benefit from India’s emergence as a sizable solar market. India’s central government wants to see 20 gigawatts of grid-tied solar energy and 2 gigawatts of off-grid uses by 2022, and it launched an incentive program in January 2010 that has auctioned off projects. A few states in India also run solar incentive programs. All these efforts are recent, so whether India can hit its goals still remains a big question.
Although India promises to be a big market, most of the solar panels used in solar projects there have come from Chinese and U.S. manufacturers, such as First Solar and Suntech Power, said Tobias Engelmeier, managing director of Bridge to India, a consulting firm who recently completed a report on India for GTM Research.
Concerns about product quality and pricing are two reasons that many project developers haven’t clamored to use Indian-made solar panels, he added, though Tata and fellow Indian manufacturer Moser Baer have been developing projects domestically using their own panels. The national solar program does require the use of domestic silicon solar cells, but there is no rule regarding non-silicon cells, and that has made First Solar a big winner so far in this new market. The local content rule doesn’t apply to state-run programs, which also have benefit First Solar because of the company’s ability to supply lower-priced panels.
BP’s exit from the solar industry after some four decades shows how competitive and crowded the solar market has become. The company said it could no longer make money from solar given the inventory buildup and plummeting prices that have characterized the solar market this year. BP’s presence in the solar market has been shrinking in recent years. Back in late 2008, it nixed a plan to complete a silicon ingot factory in Maryland. It then announced a layoff of 620 workers and a closure of some of its production lines in the United States and Spain in early 2009. BP decided on an outsourcing model by hiring Jabil Circuit to make BP-branded solar panels, first in Poland and later in Mexico.
While the outsourcing model might have been a cost-effective one, it was put in place at a time when many manufacturers were quickly expanding their internal production capacities to gigawatt-scale in order to cut production costs. Then came the incentive policy change and the continuing weak economy in Europe, the largest solar market, that have turned 2011 into a dismal year for the solar manufacturing sector.
Many companies worldwide have closed factories, laid off hundreds of workers and filed for bankruptcies. Even First Solar, long the envy of its competitors, is now a subject of takeover speculation. Those who are still around have posted losses, and the difficulties of making a profit have sparked a trade complaint from some U.S. manufacturers against their Chinese rivals.
BP’s inability to out-innovate rivals also has something to do with its demise, according to Technology Review.
It was only a few years ago when solar companies used to talk about how the market was big enough for everyone to do well whenever they were asked about competition and the likely winners and losers. Indeed, the market is getting bigger, but it also is squeezing out a lot more players.
http://www.renewableenergyworld.com/rea/news/article/2011/12/indias-tata-power-to-divorce-bp-solar
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