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OIL AND SOLAR
GREENPEACE INTERNATIONAL BRIEFING

solar not oil at BP


GREENPEACE INTERNATIONAL BRIEFING

THE GLOBAL SOLAR BOOM

JOBS IN THE SOLAR INDUSTRY

SOLAR MASS PRODUCTION

POLITICAL SUPPORT FOR SOLAR MARKETS

JAPAN - THE SUN RISES AND RISES

EUROPEAN SOLAR DEVELOPMENTS

THE US MILLION SOLAR ROOFS INITIATIVE

BP - OIL AND SOLAR DOLLAR FACTS

THE SCALE OF BP AND SOLAR (MEGAWATTS PV)

SOLAR PHOTOVOLTAICS EXPLAINED

"Solar photovoltaic generation of electricity can be a multibillion dollar industry employing hundreds of thousands of persons and serving the energy needs of hundreds of millions of persons starting with the turn of the century."
Paul Maycock, senior analyst, industry report conclusions, May 19971


"One day this industry [solar] will be as big as oil"
Head of BP Solar, quoted in BP's The Shield Magazine, Issue 1997


As the world increasingly ratchets up its response to climate change, the time when a solar economy replaces a fossil fuel economy is almost universally accepted. However it is decisions by industry, governments and people that will determine the pace of change.

The fact is that if we burn more than quarter of known economically recoverable fossil fuel reserves - coal, oil and gas - we will not be able to stay within potentially "safe" ecological limits of climate change.2 This has big implications for long term investments in oil exploration, development and use.

The lead up to the major international Kyoto Climate Summit, December 1997, saw an increasingly division on climate change and solar and renewable energy technologies within ranks of the oil industry.

In May 1997 for example BP agreed that precautionary action on climate change was justified given current scientific understanding.

Shell International also joined the more progressive debate on climate and solar: it agreed that precautionary measures should be taken on climate change, and announced a new division, Shell International Renewables in October 1997. Shell wants to capture 10% of the global solar market before 2005 - clearly the race for the solar share, even among the oil companies, has begun.

In contrast US oil giant Exxon made significant efforts to undermine UN negotiations. It's position on renewable energy was clearly stated, and evidently at odds with its European counterparts. Their Scientific advisor stated last November that "Even with well funded, long term research and development there is no guarantee that alternative energy technologies will be socially, economically or environmentally acceptable."3

Yet despite these differences over climate change and renewable energy, no oil company has yet switched investments away from climate damaging fossil fuel investments. BP for example remains intent on expanding into new oil frontiers in Alaska and the Atlantic; its solar investments, while important, remain a tiny fraction of its oil investments.

On January 30, BP will formally open its new 10 MW (Megawatt) solar factory in Fairfield California, employing 30-100 people. The investment cost to BP of US$204 million with BP's 1996 exploration expenditure of $2,160 million5


THE GLOBAL SOLAR BOOM

"I've been in the business nine years, and I've never seen it this good"
Len May, senior executive, Solarex, the world's 2nd largest solar PV company.

In 1997 a predicted 25% growth rate is making this a record year of expansion for the global solar PV industry, worth in excess of US$1 billion. BP are currently fourth in the world manufacturer league table, with 10% of the global market.


Table 2: World Photovoltaic Shipments6 (MW year)

"Business as usual" market analysis forecasts7 that global annual sales of 800-1,000 Megawatts by 2010, worth US $8-10 billion. A recent industry conference sponsored by Shell and other companies predicted that due to "recent innovations in manufacturing techniques" the global market could be worth $18 billion by 20108. If world Governments take the threat of climate change more seriously, the global annual market could grow at a faster rate still - projections taking into account further action on climate change forecast an annual market five times business as usual by 2010, i.e. 4000MW per year.


Table 3: Photovoltaic module manufacturing expansion profile as of January 19989

This latest survey by leading industry journal Photovoltaic Insider's Report was deliberately conservative as it excluded some other known expansion announcements until construction is completed and production actually begins.

For example, four of the main Japanese solar companies (Kyocera, Sharp, Sanyo and Mitsubishi) together have announced plans to increase production to 210-240MW by the year 200010.

The report states that "Another finding worth noting is that while the US leads the world in PV production, at least 175MW (66%) of the 263.5 MW of production capacity expansions detailed in this survey is located outside the US"


JOBS IN THE SOLAR INDUSTRY

"Photovoltaic is a high technology that, as a domestic industry could create or support as many as 3,800 well paying jobs for every US$100million worth of PV sales."
US Department of Energy.

High growth rates will create thousands more new jobs in solar manufacturing. While rough estimates suggest that the global solar industry currently employs around 10-12,000 people (not including research and development), the Japanese giant Kyocera alone plans to employ 2,500 people by the year 2000.

But the real employment value lies in the other components of solar power systems such as electronics, parts, installation and maintenance.


Table 4: Photovoltaic Market Growth and Employment Scenarios to the Year 2010

World Solar PV market growth rate (%) 15 20 25* 30 35
Annual Shipments MW/annum 630 1,240 2,380 4,460 8,160
PV Sector Employment 152 261 453 783 1,345

(thousand)
*Current annual market growth rate for solar PV


SOLAR MASS PRODUCTION

It is already known that there are no significant barriers to building much bigger and cheaper solar factories today. A BP study12 demonstrated last year that with an investment of US$550 million into a 500 Megawatt solar photovoltaic factory, the production costs of solar can be reduced by 80%. The BP study shows that a large-scale factory can be built utilising existing technologies and equipment and would employ 3,000 people. "the study has shown, subject to appropriate investment, that there are no barriers to achieving 500MWp per annum production of photovoltaic modules using crystalline silicon".

Commenting on the BP report, a senior industry analyst stated that 'at these costs solar will be fully economic throughout the world.'13 Industry analysis shows that cost reduction on this scale would generate an annual global market of at least US$100 billion.14

Professor Bob Hill, Director of Newcastle Photovoltaic Applications Centre, and a contributor to the BP study confirmed the significance of the findings: "These findings are extremely significant in that genuine quotations were obtained for all of the equipment and materials. The cost figures are therefore based on firm data obtained and analysed by the leading European companies and academics. This confirms that market development with present technologies will result in solar being cost effective throughout Europe"

Another industry expert15 commented that the "the problem had not been answered authoritatively since many had questioned the availability of equipment to manufacture modules on this scale, and, further, the availability of raw materials to supply such a plant. The answer to both questions, the study finds, is a definite 'yes'". It has been noted that building mass production facilities 'cannot' occur until the market has grown first. Companies commonly create, as well as follow, markets for many different reasons. Market support and creation is also a political as well as investment choice, such as the Japanese Governments' plan to install 4,600MW in by 2010.


POLITICAL SUPPORT FOR SOLAR MARKETS

"Both the Japanese and the German Governments have decided that rooftop, grid connected PV electricity is good enough to subsidise. The Japanese, with typical acumen, have realised that the key to reducing costs is mass production.. As a result, the German solar panel market has taken off like a rocket and BP has 25% of it."
Ceiling Power - article in BP's The Shield Magazine, Issue One 1997

The world's three major trading blocks, Japan, USA and Europe are engaged in an increasingly fast-paced solar race. The multiple benefits inherent in solar PV technology make the rewards significant - the prize is a global multi-billion dollar solar PV market.

A key mechanism in attaining that prize is not simply domestic political support but the provision of concrete policy and fiscal incentives for the implementation of solar power. A healthy domestic market is an essential launch pad for efforts to capture a share in the emerging global market for manufactured products. As Harvey Forest, a senior US solar executive at Solarex warns "I'm really fearful that without a strong domestic [US] market, this industry will never expand"16 The Japanese approach is different from the USA.


JAPAN - THE SUN RISES AND RISES

"Japanese electrical companies are lining up to get a share of the fast developing market for residential solar power generation systems".
Nikkei Weekly, January 1997

In Japan, full page advertisements for solar homes appear in the national newspapers alongside ads for cars, computers and televisions.

Current analysis of the Japanese industry confirms that the Government programme to create a strong domestic market will give Japanese solar companies a massive competitive advantage in the global market. This winning industrial strategy is common to the development of cars, computers and electronics in Japan.

The Japanese government programme for the solar industry revolves around Government financial incentives to companies and individuals to build solar homes.

The programme -


Table 5 Japanese Solar Homes Programme17

1994 1995 1996 1997*
Total solar homes approved 577 1,023 1,866 9,400
Volume, Megawatts peak (MWp) 2.0 3.8 7.2 36-38
Subsidy (billion yen)** 1.85 3.31 4.06 12.41

*1997 forecast based on FY 1997 Government figures
.

Residential sales in Japan are expected to reach 100 billion yen (US$881 million) by 2000. Not surprisingly, the increased demand stimulated by Government support has galvanised Japanese companies, notably Kyocera Corp, Sanyo Electric Co, Sharp Corp, Matsushita Battery Industrial Co and Mitsubishi Electric Corp18.

Kyocera, Sharp, Sanyo, Mitsubishi together have plans for production capacity of 210-240 MW by 200019. This is more than a tenfold increase in domestic production over 1996.

Kyocera


EUROPEAN SOLAR DEVELOPMENTS

Government support in countries such as Germany, Switzerland, and the Netherlands has given rise to some progressive plans for solar PV in Europe.


THE US MILLION SOLAR ROOF INITIATIVE

"We will work with businesses and communities to use the sun's energy to reduce our reliance on fossil fuels by installing solar panels on one million more roofs around our nation by 2010. Capturing the sun's warmth can help us to turn down the Earth's temperature."
US President Clinton, UNGASS (the third UN summit on the state of the environment), June 1997

The US Million solar homes programme first proposed by the Solar Energy Industries Association25 arose in direct response to the threat that Japan and Europe would eclipse US leadership in solar PV in under four years as a result of their head start in domestic solar initiatives. The SEIA stated that "The Japanese and German governments are spending 10 to 20 times more than the US to commercialise PV. The Japanese have a clearly stated goal of attaining global PV market dominance".

The US Government26 has estimated that the Million Roofs programme would create approximately 70,000 new high technology jobs by 2010.

The Million Solar Roofs is an impressive initiative, but when compared to Japanese or European Government support programmes lacks support via concrete policy action, and public funding. As John Browne, the Chairman of BP commented on the role of Governments in climate change "Without the right incentives, there will be very little practical action - just words"27.



BP - OIL AND SOLAR DOLLAR FACTS


$1 Price per watt of solar panels that would create a global annual $100billion market28
$4 Average wholesale price for solar module in 199529
$7.1m Cost to BP purchase the Fairfield California 10MW solar factory in a bankruptcy sale in 199630
$15-20m Annual investment costs in solar division by BP31
$20m BP's total costs to open Fairfield factory January 199832
$100m Total investment in solar by BP to date33
$100m Estimate of BP's revenue from solar PV sales in 1996
$109m Japanese Government support to solar PV in 1996
$122 m Kyocera investment in solar to year 200034
$163m Japanese Government support to solar PV in 1997
$550m Cost analysis by BP to build a 500MW solar factory that would reduce manufacturing costs fourfold to $1 per watt and make PV globally economic.35
$881m Estimate for residential PV sales in Japan by 200036
$1,130m Value of global annual PV market in 199537
$1,000m Solar sales by BP by the year 2010, under BP's current plans38
$800-1,000m Business as usual market forecast of global PV market by 201039
$2,160m BP exploration expenditure 199640
$4,168m BP annual profits 199641
$5,087m Capital expenditure, payment for fixed assets, BP 199642
$18,000m Global PV market forecast for 2010 with manufacturing innovations43
$27,000m Estimated global PV market if manufacturing costs fall to around $1.50 per watt44
$35,645m BP total fixed assets 199645
$73,072m BP turnover 199646
$100,000m Industry estimate of global annual PV market if manufacturing costs are reduced to about $1 per watt47


THE SCALE OF BP AND SOLAR (MEGAWATTS PV)

0.012MW Total amount of solar installed on BP's petrol station - in Germany
1MW Solar installed on a single building in Germany48
10MW Annual output of BP's California solar factory opened January 1998
10MW German market sales estimate for 1997
12MW Estimated BP Solar sales
25MW Annual output of Shell/Pilkin 1997ington factory opening in Germany 1999
50MW BP's current stated goal of annual solar production capacity by 2000
120MW Estimated annual global solar sales in 1997
140MW Japanese estimate for annual domestic market in 2000
263MW Annual output of new solar factories agreed to come on line globally by 2000
210-240MW Annual production plans by 2000 of four Japanese companies
250MW Japanese estimate for global annual sales in 2000
400MW Japanese Government target for domestic solar installation by 2000
500MW Size of factory calculated by BP that reduce manufacturing costs fourfold to $1 per watt making solar economic globally.
600MW Total PV installed globally, by end 199549
800-1,000MW Business as usual annual global market by 2010
3,000MW EU Energy Commission target for solar installed in Europe by 2010
3,025MW Total solar installed by 2010 of US Million Roofs Program
4,000MW Estimated annual global market with enhanced government action on climate change
4,6000MW Japanese target for solar installed domestically by 2010


SOLAR PHOTOVOLTAICS EXPLAINED

On earth, the amount of solar energy available to generate photovoltaic power is about 10,000 times greater than total world energy use today50.

Solar Photovoltaic enable sunlight to be transformed directly into electrical power. Certain materials naturally release electrons when they are exposed to light, and these electrons can then be harnessed to produce an electrical current.

Photovoltaic cells, also called solar cells, are made from the same semi-conductor materials used in computer chips. All solar cells have at least two layers with a positive and negative charge. The electric field across the junction between the two layers causes electricity to flow when the semiconductor absorbs photons of light and releases electrons.

Electrical contacts attached to the front and back of the cell enable it to become part of the electrical circuit. Over 98%of solar cells are made with silicon. These cells are quite brittle, so several cells are wired together and enclosed in a rugged, protective casing called a module or panel. A group of these modules is called an array.

Photovoltaic modules produce DC (Direct Current) electricity which can be converted to AC (Alternating Current). The amount of power produced is measured in watts (W), kilowatts (kW) and Megawatts (MW). The maximum power output of a photovoltaic array is typically expressed as kilowatts of peak capacity power (kWp) and power output over time, kilowatt hours (kWh).

Solar Photovoltaic were first developed in the 1950s for space exploration, and terrestrial systems development began in the early 1970s following the oil crisis.

Photovoltaic have a number of critical advantages -


Notes:

1 Photovoltaic Technology, Performance, Costs and Market 1975-2010.Paul Maycock, May 1997.

2 Fossil Fuels and Climate Protection: The Carbon Logic. Greenpeace International, September 1997 .

3 Global Climate Change" Ghent, Belgium, November 22 1997 Dr Brian P Flannery Scientific Advisor, Exxon Research & Engineering Co

4 Solar Flare 97 2

5 BP Annual Report and accounts 1996 calculated at £1=$1.6336

6 Photovoltaic Insider's Report. August 1997.

7 1 ibid

8 World Photovoltaic Power 97. Conference November 10-12 San Diego CA

9 Photovoltaic Insider's Report. January 1998

10 The Solar Letter. Vol 7 No1 January 3 1997

11 Photovoltaic in 2010 European Commission Directorate General for Energy 1996.

12 A study of the manufacture at 500MW pa of crystalline silicon photovoltaic modules. Tim Bruton, BP Solar International et al, 14th European Photovoltaic Conference, Barcelona, July 1997

13 Paul Maycock, Editor of PV News, quoted in August 1997 edition

14 Solar Flare, 96-3.

15 Photovoltaic Insider's Report. October 1997

16 An industry relishes its day in the sun. New York Times 16 August 1997. www.seia.org/nyt-sol.htm

17 Solar Flare, 96-5.

18 The Solar Letter, Vol 7, No 1, January 3 1997.

19 Solar Flare, 97-3.

20 PV News. March 1997.

21 Energy for the future: renewable sources of energy. White Paper for a Community Strategy and Action Plan. Communication from the Commission, December 1997

22 SolarFlare, 97-3.

23 The PV Programme 1997-2000 in the Netherlands, NOVEM.European Solar PV Conference, Barcelona ,June 1997.

24 Market Introduction of Grid-connected Photovoltaic Installations in Germany,. H Gabler et al, Fraunhofer Institute, 14th European Photovoltaic Conference, Barcelona, July 1997.

25 Proposal for a million Roofs Program. April 23 1997. www.seia.org/millroof.

26 www.eren.doe.gov/millionroofs/details

27 The lion lies down with the lamb - Profile John Browne of BP CBI News January 1998

28 Solar Flare 96-3

29 Overview of the Worldwide Photovoltaic Industry EDRI 96-41-A1 (TR) Canada Centre for Mineral and Energy, June 1996

30 Solar Flare 96-5

31 Letter to Ms Galbusera from Andrew Harper, Communications Manager BP 25 September 1997. The letter stated that "we are considering options to accelerate the business considerably beyond this".

32 Solar Flare 97-2

33 5 ibid

34 The Solar Letter February 14 1997

35 12 ibid

36 The Solar Letter. January 3 1997

37 29 ibid

38 31 ibid

39 Photovoltaic Technology, Performance, Costs and markets 1975-2010. Paul Maycock May 1997

40 5 ibid

41 5 ibid

42 5 ibid

43 8 ibid

44 Andrew Vesey, Chairman of UPVG, based on $3 per watt installed; manufacturing costs are typically 50% of total installed costs. PV Vision Volume 5 Number 1 Winter 1996

45 5 ibid

46 5 ibid

47 Solar Flare 96-3

48 Pilkington's 100,000 square feet Solar roof installation in Herne, Germany

49 Photovoltaic Energy Program Overview FY 1995 US DOE February 1996

50 Photovoltaic. Advancing towards the new millenium, US DOE, 1996.

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