Tata Power buys BP out of solar venture

Bringing an end to more than two decades of their relationship in the renewable energy space, BP Alternative Energy Holdings, a subsidiary of UK energy giant British Petroleum (BP), has decided to exit Tata BP Solar, its joint venture with Tata Power.

In a note issued on Tuesday, Tata Power said it has signed a share purchase agreement with BP to buy out 51% equity and preference shares of BP in the company, after approval from the Reserve Bank of India and the Competition Commission of India.

The British company could not be contacted for details on its exit.
Tata Power will now be the sole owner of the company.
But it will continue to source technology from BP till 2013. The two companies will soon sign a separate technology sharing agreement in this regard.

The reasons for BP exiting an otherwise healthy joint venture could not be ascertained.

Experts, however, said it could be because of shrinking profitability in the solar space despite an environment of promotion and push from the government.

“While the government’s incentives have helped
in bringing down prices of manufacturing photo-voltaic cells and modules, excessive capacity in China is making Chinese solar equipment way too cheaper in the country,” said an industry expert and a head of a privately held renewable energy company.

He said the Chinese solar equipment match European standards as that was their target market.

Orders from Europe and United States have lately dried up even as the Indian government has started focussing on solar energy, making the market a hot bed of opportunities for Chinese solar players.

Under the recently announced Jawaharlal Nehru National Solar Mission, the government is targeting an ambitious 20,000 megawatt (mw) of solar power till 2022, up from an insignificant 150 mw currently. The mission also offers several incentives to promote wider implementation of solar energy modules in the country through incentives such as solar power purchase obligations, attractive feed-in-tariffs and incentives to set up land-based and rooftop solar installations, the Tata Power note said.

“Such incentives are gradually unfolding a huge market for Chinese players in India,” said the expert, requesting anonymity.
Tata BP Solar manufactures solar photovoltaic (PV) cells, solar modules, products and systems at its plant in Bangalore. It also delivers turnkey solar solutions for upcoming solar projects.