BP Solar lowers cost in drive toward grid competitive electricity

Focus on sales growth through lower cost supplies and manufacturing will lead to plant closures in Spain and phase out of module assembly activity at Frederick, Maryland, USA.

BP Solar today announced plans to refocus its manufacturing activities in order to reduce unit costs and improve its competitiveness. It will achieve this through access to lower cost supplies, and by continuing to grow only its most competitive manufacturing worldwide.

As a result, module assembly will be phased out at its Frederick, Maryland, facility, and its cell manufacture and module assembly facilities in Madrid, Spain, will close. Silicon casting, wafering, sizing and solar cell production will continue at Frederick.

“This comes at a time when solar markets are unsettled by the impact of the global economic environment, an over-supplied market, increased competition and rapidly falling prices, said Reyad Fezzani, CEO, BP Solar. “The decision is part of the long term strategy to reduce the cost of solar power to that of conventional electricity.”

The phase out of module assembly at Frederick will result in the elimination of approximately 140 jobs out of about 600. In Spain the losses will be approximately 480 positions out of 575, of which around 280 are at the Tres Cantos site and around 200 at San Sebastian de Los Reyes.
“We deeply regret the impact of this business decision on our employees and the local communities,” Fezzani said. “We have a long history at both the Madrid and Frederick sites. Competitive high-tech manufacturing of Ingots, Wafers and Cells will continue at Frederick. Engineering, technology product development, sales and marketing and other business support functions will also remain at both Frederick and Madrid.”

In 2008 BP Solar signed a series of strategic contracts with a number of global high quality suppliers of wafers and cells to supplement its own manufacturing capacity. In spite of the reductions announced today, BP Solar’s total global manufacturing capacity is expected to increase in 2009 and 2010.

In 2009 BP Solar has the raw material resources and capability to manufacture and sell up to 320MW in modules, a 100% increase on 2008. It also has a stable and growing competitive, long term, high quality, silicon contract position with leading global suppliers.

Commenting on the long term prospects for the solar power markets, Fezzani said: “Both Europe and the US remain key markets for photovoltaics. BP Solar is committed to its customers who continue to demand high quality solar systems with the lowest life time cost of electricity.. We believe that a growing market is the way to create material solar-related jobs – and three out of every four of those jobs will be in downstream distribution, construction, installation, financing and other support services.”
Notes to editors
BP Alternative Energy
BP Alternative Energy businesses are focused on cost-competitive solar photovoltaic systems, US onshore wind, and biofuels; through its Hydrogen Energy joint venture with Rio Tinto, BP is also progressing two carbon capture and storage demonstration projects.

BP Solar
BP Solar currently employs around 2,200 staff worldwide directly and through joint ventures. BP Solar aims to be a leading global marketer of high-quality solar photovoltaic panels and will continue to service its products and honour its warranty commitments.

BP España
Spain remains as key market for BP and currently, employs over 1800 employees in its refinery, lubricants, B2B fuels, and service stations businesses, and around 500 contractors - most of whom are based at the Castellon refinery.

BP recently invested over €350m in a new coker unit and a cogeneration plant at Castellon refinery, which created 100 new permanent jobs.
BP America:
In addition to being the largest oil and gas producer in the US, BP is the company that is investing in the most diverse energy portfolio in the industry.

Since 2004, BP has invested more than $34 billion in the US to increase existing energy sources, extend energy supplies, and develop new low-carbon technologies. BP supports a diverse energy mix- encouraging investment in both traditional and non-traditional energy sources to meet America’s energy needs today and in the future.

The BP Solar Frederick plant is one of a portfolio of BP business operations in the US which also includes exploration & production (in Gulf of Mexico, Alaska, the Rocky Mountain and Mid-Continent US), and refining & marketing operations (combining Amoco, Arco and Sohio businesses – five refineries, 2 petrochemical plants, pipelines and distribution terminals, fuels value chains and retail, Castrol lubricants, Air BP).