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If 2011 was the year of the solar shakeout, then 2017 is the year of solar's buildup.
BP embodies this transition.
Six years ago, during a period of mass bankruptcies and restructuring in solar manufacturing, the oil and gas major exited the industry after three decades in the business.
“Over the last six months we have realized that we simply can’t make any money from solar,” a spokesperson told the Financial Times in December 2011. That was true for almost every company producing PV cells and modules at that time.
But with global solar demand three times bigger than it was in 2011, BP is getting back into the industry.
Instead of focusing on making solar modules, it's going to install them.
The global oil and gas giant announced today that it is taking a 43 percent stake in Europe's biggest solar developer, Lightsource Renewable Energy. The three-year, $200 million investment will give BP access to a multi-gigawatt pipeline of PV projects around the world. The company will be called Lightsource BP.
"We’re excited to be coming back to solar, but in a new and very different way. While our history in the solar industry was centered on manufacturing panels, Lightsource BP will instead grow value through developing and managing major solar projects around the world," said Bob Dudley, BP group's chief executive, in a statement.
Lightsource is a vertically integrated developer that originates, finances and owns solar power plants. In 2010, the company had six employees. It has over 300 today.
"We saw the value of doing nearly everything ourselves," said Lightsource CEO Nick Boyle, in a previous interview with GTM.
Lightsource has a 6-gigawatt pipeline around the world, which will be executed "alongside our existing alternative energy and gas business," said Dev Sanyal, BP's chief executive for alternative energy.
In April, Lightsource announced an expansion into the U.S. market, led by a small group of industry veterans from SunEdison and Advanced Microgrid Solutions. Lightsource BP will focus on Europe, the U.S., India and the Middle East.
According to GTM Research, there will be 606 gigawatts of solar installed around the world by 2022. BP predicts that 10 percent of global electricity will come from solar by 2035.
BP has built up a 2.2-gigawatt portfolio of wind projects, solely based in the U.S. In 2013, the company weighed selling its wind business, but decided to keep the assets when it couldn't find a buyer.
Royal Dutch Shell made a similar reversal this year, after suspending investments in wind and solar in 2009. The oil major unveiled plans to invest $1 billion per year in clean energy. It also acquired competitive energy suppler MP2 Energy, which has a 1.7 gigawatt portfolio of wind, solar and gas projects.
In recent years, Total and Statoil have also stepped up their investments in solar, storage, offshore wind and carbon capture.
According to a report from Wood Mackenzie from earlier this year, revenues from renewables will be nearly three times higher than those from U.S. unconventional fossil fuels by 2035. This is causing oil and gas majors to reconsider their investments.
“The majors are faced with a mega trend of cost reductions and continuous growth in renewables that started slow but is gaining momentum,” said Valentina Kretzschmar, director of corporate research at Wood Mackenzie, speaking about the report. “It’s driven by technology innovation that seems absolutely unstoppable right now, and there is a realization among the majors that it’s a trend that’s not going away -- and that it’s a threat to their core business.”