Dec. 23 (Bloomberg) -- BP Plc, Europe’s second-largest oil company, said it is sticking with a proposed A$923 million ($937 million) solar project in Australia after deciding to exit the business globally amid a glut.
“We continue to remain part of the consortium and we continue to work to bring the project to fruition,” Jamie Jardine, a Melbourne-based spokesman for the company, said by phone today.
While London-based BP is proceeding with the plan, the company and its partners in the proposed 150-megawatt solar plant in Australia’s New South Wales state have yet to sign power-supply agreements needed to advance with the project and failed to meet a Dec. 15 deadline to reach a financial close, Jardine said. The companies expect to start construction of the venture in the second half of 2012, later than previously estimated, he said.
BP will exit the solar business after 40 years because it has become unprofitable, Mike Petrucci, the chief executive officer of the solar unit, told staff in an internal letter earlier this month. The industry faces oversupply and price pressures after Chinese competitors increased production.
BP, Fotowatio Renewable Ventures and Pacific Hydro Pty won A$306.5 million in Australian government funding earlier this year to build the Moree solar farm. The companies aim to build one of the world’s largest plants using photovoltaic panels to turn sunlight into power, Javier Huergo, head of business development of Madrid-based Fotowatio, said in June.
The partners had expected to begin building the solar farm in the first quarter of 2012, Huergo said at the time. BNP Paribas, Banco Santander SA and National Australia Bank Ltd. were among eight banks that initially agreed to help finance the venture, Huergo said in February.
Australia, which has set a target of generating 20 percent of its power from renewable energy sources by the end of the decade, also said in June it would provide A$464 million to a solar project in Queensland led by a unit of Paris-based Areva SA. That venture proposed a 250-megawatt solar thermal and gas hybrid power plant, according to the government.
BP, an early entrant into the solar business, quit manufacturing entirely in July. The company plans to sell stakes in the more than 158 megawatts of projects it’s developed with local partners in countries including Italy, Spain, Germany, Britain and the U.S. Its solar equipment venture in India with Tata Power Co. is conducting “business as usual,” K. Subramanya, chief executive of Tata BP Solar India Ltd., said on Dec. 21.
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