Dubai, UAE, Nov. 5, 2000 (AME Info)—BP Solar already has a strong presence in the Middle East with a manufacturing base in Saudi Arabia (BP Solar Arabia) and a number of representatives in the GCC. The Company is involved in a number of prestigious solar projects in the region, particularly in the Oil & Gas and Telecommunications field for off-grid power systems.

In response to the growing interest for using solar panels integrated on buildings, BP Solar is positioning itself as the leading supplier of this exciting technology.

For centuries man has dreamt of harnessing the power of the sun, and at the dawn of the 21st century technology is turning that dream into an economic reality. BP is at the forefront of solar energy research and has a team of scientists working on perfecting solar panels that could one day be used as a building material to cover the south-facing sides of office towers.

The effort began about five years ago, when oil prices were low. But pushed by environmentalists, politics and a persistent worry that fossil fuels will eventually run out, BP and other oil companies are pursuing alternative energy at a pace unmatched since the energy crisis of the 1970s.

BP, which recently adopted the slogan “beyond petroleum,” plans to expand its wholly owned BP Solar subsidiary into a US$1 billion business by 2007 from $200 million today. Royal Dutch/Shell Group is investing $500 million in renewable energy sources, including biomass, solar and wind power.

US major Texaco last April created a subsidiary whose main task was to develop fuel cells, which are battery-like devices that are widely seen as a potential replacement for the internal-combustion engine. “There’s a commitment to this stuff,” says Graham Batcheler, president of Texaco Energy Systems Inc., the alternatives unit based in Houston. “The question is, how successful can you be? And in what time frame?”

Efforts to develop alternative energy were all but abandoned during the 1986 oil-price collapse and the industry consolidation that followed. But concern about global warming has created a political climate that is increasingly hostile to fossil fuels.

Meanwhile, technology and deregulation have spurred the search for alternatives, adding to a growing belief that there may someday be something better than oil.

BP, the world’s largest maker of solar panels, both in sales and volume, has yet to turn a profit on its solar investment. But it makes solar panels for far less than it did 20 years ago: $7.50 per watt today compared with $80 per watt in 1980. And technology has allowed the solar-energy division to develop thin-film panels rather than the more widely produced silicon-chip panels. This year BP Solar will invest about $10 million in thin film.

“We can frost it,” says BP Solar President and Chief Executive Harry Shimp. “We can color it.” And at a cost of $600 per square meter, it is less expensive than polished stone.

Company executives predict sales will boom when scientists develop a panel that is larger than the standard module, which is 60 centimeters by 120 centimeters. But innovation in size is probably several years away.

In some cases, deregulation is driving the alternative energy industry. When California’s power market was restructured in 1998, the city of Santa Monica shifted to geothermal and solar power. While energy costs rose 5%, the city was willing to pay the environmental premium.

Companies like BP and Shell are counting on consumers’ willingness to pay a similar “green” premium, especially as worries about pollution and climate change intensify. Already Germany and Japan subsidize solar power, in large part to address environmental concerns.

Then there is the hotly debated matter of whether or when world oil reserves will run out. “Not in 10 years, not in 20 years,” contends Larry Goldstein, president of the Petroleum Industry Research Foundation. “But sometime,” he adds.

In fact, many experts believe the world has about 40 years worth of proven reserves, but companies such as BP, Texaco and Shell believe alternative energy will become increasingly attractive even before the oil runs dry.

BP and Shell predict renewable sources may fill up to 50% of the world’s energy needs by 2050.

Though less bullish than its European counterparts, Texaco earlier this purchased a 20% share of fuel-cell company Energy Conversion Devices for $67.3 million. Last month it formed a joint venture with the company.

Shell last year created Shell Hydrogen, a wholly owned subsidiary in the Netherlands. The unit last month formed a joint venture with a United Technologies Corp. subsidiary. And in suburban Houston, some 70 Texaco scientists work in a complex of cinderblock buildings to try to determine how best to process fossil fuels into hydrogen.

“Most of the technology is there,” says Curtis Krausse, a Texaco chemical engineer. “The question is how do you make it smaller and cost effective so that it can fit under a hood and is cheap enough to buy.”

Of course, as prices for its main product hover above $30 a barrel, the oil industry isn’t in any hurry to change the status quo. “It’s hard to get away from your core business when every barrel you produce is $30 in the coffer,” says Batcheler. “But this is the future. Either you get on board now or you play catch-up later.”

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