BP closes alternative energy division.
July 10, 2009
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BP
From the NPR story.
BP Alternative Energy is/was a set of research and investment into alternative energy fields such as solar, hydrogen fuel cells, biofuels, and carbon-capture and storage. From this site, it appears that they will be closing the solar and wind research, and moving mainly into biofuels (such as their biobutanol fuel).
The chief executive of the department is being forced into retirement.
At least they got some good publicity out of it for a couple of years, right?
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This comes on the heels of T. Boone Pickens abandonment of his wind power venture earlier this week. The 81-year old capitalist was going to invest $10 billion in a wind power venture in Pampa, Texas.
From a story back in November 2008:
"Friends, neighbors and partners, we'll do a first-class job," he continued. "I'd like to think I have credibility in this area."
He showed a deft touch on the whiteboard as he touched on the particulars of oil exploration, the cost of natural gas and the potential for wind power.
...
It wasn't hard for him to make his case.
"How many of you have heard me say Pampa will be the wind capital of the world?" asked Pickens, to a sea of nods. "You like that, don't you?"
Pickens, who owns a ranch not far from Pampa, struck the pose of a benevolent, super-rich uncle.
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It appears that the problem was that he was trying to get the taxpayers to pay for the transmission lines and the state to give the land for these lines. When that fell through, he was sunk.
What's the story here? Same-old-same-old. When oil prices are high, there's a lot of fancy talk and publicity about investing in renewables, solar, biofuel, and more. There is public support for financing and grant aid, etc.
Then, as always happens, oil prices fall back to Earth. Either demand gets cut down due to a recession or the oil producers get threatened by alternative energy and flood the market with cheap oil to kill the growing industry.
This is why it is very tricky to invest in renewable energies- for a year or two, government aid and grants / high oil prices will lead to huge in flows of support and funding. Then, when elected officials change, priorities change, or oil prices fall - suddenly the funding will dry up. Projects will get canceled from governments or states, and alternative energy projects from the big Oil will silently disappear.
This situation isn't being helped by the Obama stimulus plan, which included money for alternative energy funding. Unfortunately it has been slow and confusing:
From the WSJ article:
Three new stimulus programs were hailed by analysts as likely to have the biggest effect in boosting renewable energy: a cash incentive from the U.S. Treasury for 30% of the cost of a renewable energy project, loan guarantees for renewable energy projects, and loan guarantees for renewable energy manufacturing.
None of these incentives has yet been defined with specific rules and none of the programs are yet accepting applications, though both the U.S. Treasury Department and the U.S. Department of Energy, which administers the loan-guarantee programs, promise to issue rules and open up to applications soon, possibly in July.
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Until the stimulus funding plan gets worked out and in motion it will have a dampening effect on renewable investing, as no one knows what the rules will be in a couple of months.
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