BP Solar To Close Sydney Plant

BP Solar, a division of BP (NYSE: BP), will cease the production of solar photovoltaic (PV) power cells and panels from its manufacturing plant in Sydney Olympic park at the end of March 2009.

The decision comes because the company is looking to focus its operations at larger scale plants in lowest cost manufacturing countries, in order to drive down the cost of solar power for consumers.

The BP Solar sales and marketing team in Australia will continue their activities, and aim to grow the sales and servicing of solar products. However, approximately 200 solar jobs will be lost from the manufacturing plant, the company said.

"The challenge for solar power is to reduce its costs to the level at which it competes on an equal footing with conventional electricity delivered through the power grid. To do this we need to expand at scale and reduce costs." says global CEO of BP Solar, Reyad Fezzani.

"We’ve looked at all options in our Sydney manufacturing site and the physical location, lack of expansion potential and lease agreements just don’t make it competitive: the most modern Solar PV manufacturing plants are up to twenty times larger than our Sydney site and we are competing in this global market.

"It is a sad day for us as a company and for the Sydney plant. We deeply regret the job losses that will result from the closure and are talking to staff today about what this means for them, I’d like to publicly thank the BP Solar staff at Sydney Olympic Park for their commitment to the company over the years."

"Globally, BP is investing around $1.5 billion US dollars per year in alternative energy, building material, focused, low carbon energy businesses. BP Solar is a material part of BP’s Alternative Energy portfolio, and it needs to compete for investment and demonstrate profitable returns, just like our other businesses in the BP Group. Faced with a tough external environment, and an increasingly competitive solar market, we are focusing hard and listening to our customers."

In October, BP Solar suspended plans for a $97 million expansion in Frederick, Maryland, that would have created one of the world’s largest solar production plants. The company cited intense global competition in making that decision.

This week the company announced a three-year contract with LDK Solar (NYSE: LDK) for approximately 435 megawatts (MW) of multicrystalline silicon solar wafers.