BP Shutters Alternative Energy HQ

June 29, 2009

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British Petroleum has shutdown its alternative energy headquarters in London, accepted the resignation of its managing director and announced budget cuts – all moves likely to be seen as further signs of the oil group moving “back to petroleum,” reports The Guardian.

Tony Hayward, the group’s chief executive, told The Guardian that BP remained committed to exploring new energy sources and the non-oil division would benefit from moving back to corporate headquarters.

This isn’t the first time these issues have been raised. In his first strategy presentation as BP’s CEO, Hayward said the company has received little, if any, uplift from its investments in wind and solar power and fuels made from crops, leading to speculation that the company would pull out of alternative energy.

Vivienne Cox, managing director, who oversaw a small division of 80 employees concentrating on wind and solar power, is stepping down this week. In addition, BP is cutting the alternative energy budget from $1.4 billion (£850m) last year to between $500 million and $1 billion in 2009, although spending is still roughly in line with original plans to invest $8 billion by 2015, according to The Guardian.

In April, the company closed several solar power manufacturing plants in Spain and the U.S. with the loss of 620 jobs and Hayward has publicly questioned whether solar would ever become competitive with fossil fuels, reports the newspaper. BP also has given up plans to enter the UK wind industry and concentrated all of its wind activities in the U.S.

Although Hayward told The Guardian that Cox is stepping down to spend more time with her family, various industry insiders also told the newspaper the reason could be frustration over the business being downgraded in importance.

However, Cox had already reduced her work week down to three days and had publicly admitted the difficulty of combining her two roles, according to The Guardian. She will be replaced by her former deputy Katrina Landis.

Overall, BP’s “Beyond Petroleum” campaign was a success. Sales from 2004 to 2005 rose from $192 billion to $240 billion then to $266 billion in 2006. Moreover, a Landor Associates survey of consumers found that 21 percent of them thought BP was the greenest of oil companies. BP said that from 2000-2007, its brand awareness went from four percent to 67 percent.

While the company is restructuring, new concerns were raised about BP’s alternative energy business after a fire broke out at one of the company’s largest solar power installations in Germany, reports Times Online.

The fire on June 21 destroyed nearly 200 square meters of one of the world’s largest roof-mounted solar panel arrays on a warehouse complex in Burstadt, near Mannheim, reports the newspaper.

Concerns have been raised in the past about some junction boxes manufactured by BP Solar, which were said to be prone to overheating, according to Times Online. The company recalled and replaced some of these in 2006 and 2007.

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