Oil giant BP plc plans to turn solar power affiliate in Frederick

Daily Record, The (Baltimore), Nov 29, 2005 by Kathleen Johnston Jarboe

Oil giant BP plc plans to turn a solar power affiliate into an alternative energy heavyweight that would develop hydrogen, wind and other renewable power plants worldwide, the company said yesterday.The news comes as subsidiary BP Solar completes a $25 million expansion to its Frederick solar power panel factory and as the subsidiary reached profitability for the first time last year.

BP Solar had revenue exceeding $400 million in 2004.Our recent experience, particularly with solar, has given us the expertise and confidence to develop new products and markets alongside our mainstream business, said BP Chief Executive Lord Browne, in a prepared statement. The Frederick expansion added 50 jobs and doubled capacity to the plant. Its panels have been sold through distributors in the United States and Europe. But Home Depot Inc. also began selling the rooftop devices last year and this year in California and New Jersey.BP chose to start its Home Depot program in states that offered tax credits or rebates for those purchasing the pricy panels. A typical home system can cost between $14,000 and $20,000.Still, tax credits, rising energy costs and cheaper technology have fueled the expansion of the solar panel makers. Japan's Sharp Corp. and Shell Oil Co. have also expanded their solar panel affiliates in the past few years. This month SunPower Corp., a California company producing solar panel equipment, leveraged market sentiment to stage a $138.6 million initial public offering. Next year, purchasers of the panels will become eligible for a federal tax credit worth up to $2,000.Part of the reason for increased interest in solar power is it has become more economical and because we have an energy crisis in this country, said Noah Kaye, spokesman for the Solar Electric Power Association.BP, a British company, estimated it would spend $1.8 billion during the next three years to build the new affiliate called BP Alternative Energy that would focus on low-carbon technologies. It plans to spend up to $8 billion on building the subsidiary over the next decade.BP Alternative Energy is targeting high-wind lands it owns in the United States away from residential development to build a 200-megawatt wind farm by 2007. With other holdings, it could build more windmills producing 1,800 megawatts in electricity. Two megawatts of electricity annually is roughly the amount needed to power 100,000 homes.Other planned projects include a Scotland location that would strip hydrogen from natural gas and deposit the leftover carbon in depleted oil reservoirs. A second project would add a $400 million combined-cycle-gas-turbine to one of BP's U.S. plants. The addition would deliver 100 megawatts of power to the plant and 420 megawatts to the local electricity grid. A third project would expand other solar panel plants worldwide.We think that the whole investment - the creation of this company is a good investment for us. - It's a great way to offer a diverse set of energy solutions to our customers, said spokeswoman Sarah Howell.