BP SOLAR PULLS OUT OF AUSTRALIA FOR LOWER OVERHEAD

BP Solar has refused a bailout package and will shut down Australia's only photovoltaic cell plant in March.

This is not a happy story but it is an important story and needs to be reported.

BP Solar is closing its Australia plant and will move to a location where costs are lower. It has little choice, really, because it is in competition with China, India and U.S. companies with overseas plants where labor and other costs are less of a burden on the price of solar cells and panels.

Shortly after news of BP Solar abandoning Australia came out, another story emerged of a joint manufacturing venture between BP Solar and China's JA Solar.

6 months ago, BP Solar made public statements about a long-term investment in Australia. It is not hard to guess the current financial crisis, credit crunch and resulting recession have changed the company’s plans.

There has also been, according to Global Green's forthcoming Solar Report Card, some inconsistency in Australia's solar energy subsidies that surely must have left BP uneasy about the local market.

From Global Green’s soon-to-be-released Solar Report Card (as previewed at Solar Power International 2008): “PV has huge potential in Australia. Not only is the country one of the best insolated in the world, it also has a robust body of PV research groups (which have been emigrating overseas) and an industry already developed through a significant off-grid market…As of October 2008, there was again uncertainty regarding the government’s continued commitment to its solar program…This type of stop and go policy trend is deleterious for the development of a domestic market…”

Australian government representatives say there was no policy the government could legitimately enact to make the Melbourne plant competitive with plants in developing economies.

The Australian Industry Minister pointed out the government has funded extensive solar technology R&D.

Chandran Vigneswaran, Media Manager, BP Solar: "Helping us move down the cost curve is not something that government policy or assistance could have helped us achieve…"

Interpretation: We're doing the research. What we need from a government is subsidies to customers.

The Global Green Solar Report Card, scheduled for public release at the December UN conclave in Posnan, Poland, offers a whole host of policy suggestions the Australian government should consider to prevent the loss of its solar energy industry and other New Energy industries.

From Global Green’s soon-to-be-released Solar Report Card: “…Alongside an Emissions Trading Scheme, Australia’s government should develop a long term, bi-partisan policy framework to nurture Solar Photovoltaic deployment, so that the sun-burnt country may embrace its most powerful energy resource, redevelop its industry and take part in the emerging global PV market…”

Denmark turbine manufacturer Vestas and Australian solar power plant developer Ausra have left Australia in the last 1-to-2 years for similar reasons.

There is, at present, a fierce competition between the dinosaurs of Old Energy whose costs are skyrocketing and the young wolves of New Energy who every day move closer to grid parity by keeping all costs in control.

Australia will no doubt agonize over the loss of the plant’s 200 jobs – and it probably is of little comfort to the 200 families involved – but there is every reason to believe the jobs will, with the right leadership, come back to Melbourne and to Australia in the coming solar energy installations expansion.

Australia’s solar cities

click to enlarge

BP Solar refuses bailout packs up energy plant
Olga Galacho, November 19, 2008 (Melbourne Herald Sun)
and
JA Solar and BP Intend to Form Long-Term Agreement
November 20, 2008 (PR Newswire/COMTEX via MarketWatch)

WHO
BP Solar ((Brooke Miller, regional director & Chandran Vigneswaran, Media Manager); Senator Kim Carr, Australia Industry Minister; JA Solar Holdings (Samuel Yang, CEO)

WHAT
BP Solar announced it will close its Melbourne solar cell and solar panel manufacturing facility.

click for the details

WHEN
- The plant will shut down in March 2009.
- 6 months ago BP Solar said its investment in Australia was long term.
- The BP Solar/JA Solar joint venture agreement will last 5 years.

WHERE
- BP is based in the UK.
- Vestas is based in Denmark.
- Ausra moved from New South Wales to the Silicon Valley area of California.

WHY
- The Australian government offered BP Solar financial assistance to get it to stay but no deal could be reached that would keep BP’s costs in check.
- The government-sponsored $75 million Solar City project, subsidizing rooftop installations, could not offset the savings BP Solar believes it will obtain by moving closer to silicon suppliers.

The race for grid parity, in the U.S. and around the world, is driving producers to cut costs in any and every way possible. (click to enlarge)

QUOTES
- Senator Kim Carr, Australia Industry Minister: "We asked them what it was that we could do to stop them shutting up shop and moving overseas, but they replied they had made up their mind…"
- Samuel Yang, CEO, JA Solar: "Our two companies are in a strong position to help lead the way in achieving grid parity more rapidly and accelerating the worldwide adoption of solar photovoltaic solutions. We share this common goal...This agreement further demonstrates JA Solar's capability of providing low-cost and high quality manufacturing in the industry and is expected to give us market access through BP's well- established global brand and marketing networks. The proposed alliance is a good fit and is intended to allow us to build on each others' strengths in a mutually beneficial way..."