BP Solar, a 40-year-old business that already wound down its manufacturing unit this summer, will shut down altogether because it's no longer profitable, according to reports. But just as BP falls victim to a market facing oversupply and price pressures, another company -- one of the world's biggest oil and gas pipeline companies, no less -- is jumping in.
TransCanada, the same company that wants to build the controversial $7 billion Keystone XL pipeline from Alberta to Texas Gulf Coast refineries, announced Tuesday it has agreed to buy nine solar projects from Canadian Solar for about $452.5 million (C$470 million). The nine solar projects -- all located in Ontario -- have a combined capacity of 86 megawatts.
TransCanada is clearly in a solar-buying mood. Perhaps, the pipeline company will take a gander at the more than 158 megawatts of solar power projects that BP plans to sell.
Signs of BP Solar's demise began in early 2009 when the company decided to stop most of its manufacturing. At the time, the company closed several of its factories in Spain and cut 480 jobs after the once-booming Spanish solar market cracked as the government pulled back its generous incentives. BP decided in July to stop manufacturing entirely and centered its efforts on developing large projects.
Unlike BP, TransCanada won't get into the business of developing solar power projects. Canadian Solar will develop and construct all nine of the projects using its own photovoltaic panels. Under the deal, TransCanada will only pay for each project after they begin commercial operation. And since the projects already hold 20-year contracts with Ontario Power Authority to the feed-in-tariff tune of C$0.443 per kilowatt hour, the projects will immediately be profitable for TransCanada. The pipeline company expects the projects will come on line between late 2012 and mid-2013.
TransCanada is known for -- and generates much of its profits from -- its major oil pipeline projects. But it has more than dabbled in renewable energy over the years. The company operates the largest wind farm in Canada and the largest wind farm in New England and has three hydro electric facilities in three U.S. states.