BP, EUROPE'S second-largest oil company, is sticking with a proposed $923 million solar project in Australia after deciding to leave 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 spokesman for the company, said yesterday.
While it is proceeding with the plan, the London-based company and its partners in the proposed 150 megawatt solar plant in NSW have yet to sign power-supply agreements needed to advance with the project and have failed to meet a December 15 deadline to reach a financial close, Mr Jardine said.
The companies expect to start construction in the second half of next year, later than previously estimated, he said.
BP will quit the solar business after 40 years because it has become unprofitable, Mike Petrucci, the chief executive of the solar division, 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 won $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, the head of business development at Spain's Fotowatio, said earlier this year.
The partners had expected to begin building the solar farm in the first quarter next year, Mr Huergo said at the time. BNP Paribas, Banco Santander and National Australia Bank were among eight banks that initially agreed to help finance the venture.
Australia, which has set a target of generating 20 per cent of its power from renewable energy sources by the end of the decade, also announced in June it would provide $464 million to a solar project in Queensland led by a unit of the French company Areva SA. That venture proposed a 250 megawatt solar thermal and gas hybrid power plant, the government had said.
BP, an early entrant into the solar business, quit manufacturing entirely in July. The company plans to sell stakes in projects involving more than 158 megawatts that it has developed with local partners in countries such as Italy, Spain, Germany, Britain and the US.