BP exit solar market as industry margins evaporate

BP Solar announced that it will end its activities in the PV market today, citing it being “Difficult to sustain long-term returns for the company."

12/22/2011


BP’s decision is a clear indicator of the challenges that PV module suppliers face in remaining profitable in the current industry conditions. PV module manufacturing capacity has hit 50 GW this year, despite demand reaching just 24 GW. The resulting oversupply has put huge pressure on prices, and average prices are now 44% lower than they were one year ago. Average gross margins are now in the single digits, and most suppliers are making net-losses on their operations. 

Recent high-profile solar investment announcements from the likes of Google and Warren Buffet’s MidAmerican Energy may seem to contradict the move from one of the World’s largest Energy companies. However, these recent investments have all been further downstream in financing large utility-scale systems. These investment cases are very different to operating as a module supplier in today’s climate and so are not likely to be affected by BP, or other suppliers’ departures from the industry.

Recent years have seen huge swings in the balance between supply and demand in the solar industry. From mid-2009 through to the end of 2010, demand out-stripped supply and all suppliers were able to sell their products. This situation has changed dramatically in 2011, when rapid manufacturing expansions have coincided with a slowdown in the growth of global demand. The result has been intense competition and a fierce price war, and not enough demand to support all of the industry’s hundreds of suppliers. Clear winners in 2011 have been large pure-play Chinese suppliers, whose lower cost structure and highly aggressive pricing has allowed them gain market share throughout the year. Consequently, 4 of the world’s 5 largest suppliers of PV modules are now Chinese.

A BP spokesman in the US had commented today that "BP’s goal is to profitably grow in specific segments of the energy industry." BP has clearly abandoned hope of achieving growth or profitability in this space.

BP’s exit is not the only recent high-profile exit from the industry. With a fierce price war led by low-cost Chinese suppliers dragging most suppliers’ bottom lines into the negative, it is not likely to be the last either.



No comments
The Engineers' Choice Awards highlight some of the best new control, instrumentation and automation products as chosen by...
Each year, a panel of Control Engineering editors and industry expert judges select the System Integrator of the Year Award winners.
Control Engineering Leaders Under 40 identifies and gives recognition to young engineers who...
Learn more about methods used to ensure that the integration between the safety system and the process control...
Adding industrial toughness and reliability to Ethernet eGuide
Technological advances like multiple-in-multiple-out (MIMO) transmitting and receiving
Virtualization advice: 4 ways splitting servers can help manufacturing; Efficient motion controls; Fill the brain drain; Learn from the HART Plant of the Year
Two sides to process safety: Combining human and technical factors in your program; Preparing HMI graphics for migrations; Mechatronics and safety; Engineers' Choice Awards
Detecting security breaches: Forensic invenstigations depend on knowing your networks inside and out; Wireless workers; Opening robotic control; Product exclusive: Robust encoders
The Ask Control Engineering blog covers all aspects of automation, including motors, drives, sensors, motion control, machine control, and embedded systems.
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
News and comments from Control Engineering process industries editor, Peter Welander.
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
This is a blog from the trenches – written by engineers who are implementing and upgrading control systems every day across every industry.
Anthony Baker is a fictitious aggregation of experts from Callisto Integration, providing manufacturing consulting and systems integration.
Integrator Guide

Integrator Guide

Search the online Automation Integrator Guide
 

Create New Listing

Visit the System Integrators page to view past winners of Control Engineering's System Integrator of the Year Award and learn how to enter the competition. You will also find more information on system integrators and Control System Integrators Association.

Case Study Database

Case Study Database

Get more exposure for your case study by uploading it to the Control Engineering case study database, where end-users can identify relevant solutions and explore what the experts are doing to effectively implement a variety of technology and productivity related projects.

These case studies provide examples of how knowledgeable solution providers have used technology, processes and people to create effective and successful implementations in real-world situations. Case studies can be completed by filling out a simple online form where you can outline the project title, abstract, and full story in 1500 words or less; upload photos, videos and a logo.

Click here to visit the Case Study Database and upload your case study.