Intersolar Exhibition, Munich

Reyad Fezzani

Ladies and Gentlemen welcome, and thank you for joining us. It’s a great pleasure to talk to you about our 35-year old Solar company.

Today we will share with you our strategy, as we face a world in financial and economic crisis, and a solar market experiencing some of the toughest short-term challenges seen. Looking beyond the short term, the future opportunity for both the energy sector and for solar power is very bright, and we at BP Solar have more cause for optimism than ever.

BP Solar in BP

BP has a long and proud history as an energy company - this year we are celebrating our one hundredth anniversary, and looking forward to another century providing the energy the world needs.

Our customers continue to demand diversity in energy products and services – more oil, more gas, more transport fuels and lubricants, more chemical products, and increasingly a suite of emerging, fast growth low carbon technologies - biofuels, wind, hydrogen and solar power. And all of this to be achieved at the same time as reducing the effects of climate change, and addressing the energy security concerns of nations. Solar power plays a crucial role in BP, and we have invested hundreds of millions of dollars in Solar power for over 35 years - this we did through the good times and the bad, and we are here to tell you we remain committed as ever in this, the century of Solar power.

As we celebrate BP’s 100th year, I am proud to announce BP Solar has reached the milestone of cumulative sales of one Gigawatt - supplying 10 million solar power modules, and saving four million tonnes in CO2 emissions. At the end of 2008, one out of every 15 watts the industry installed was provided by BP Solar.

But while we may take a moment to acknowledge our achievement, we are firmly looking to the future.

the highest life time value solar power offer

BP Solar Vision, strategy, and deliverables

BP Solar is a leading global photovoltaic solar manufacturing, technology, and marketing company today serving customers in the growing markets of Europe, the US, and Asia.

Our vision is to make solar grid competitive, in time without the need for subsidies. We believe Solar is a business that should stand alone, without consumers and governments subsidizing its undoubted benefits as a low carbon power source. We are focused on being a top tier player in three core market segments:

Residential and small commercial – selling power modules and solutions through distributors, home builders and certified installers.
Large commercial – developing and supplying lifetime power and services to sectors such as retail, logistics and education, as well as the development of free-field solar farms that offer attractive returns to financial investors.
Utility scale power plants – acting as a power developer and marketer of power, solutions and services to Independent Power Producers and Utility companies.

BP Solar aims to return to be a top 5 Solar marketer delivering “the highest life time value solar power offer” to our customers, an offer we believe is the most compelling in our industry today.

This is because of a profound transition occurring in our industry that plays to BP Solar strength - our customers are not just interested in buying cheap equipment on a dollar (or euro) per watt basis.

They are demanding the lowest cost of solar power priced in cents per kilowatt hour over the entire life of their system and a full value service offering. This means those that can provide products and services that have lasting power will win.

And to prove this we have recently signed up a record number of deals with customers to this offer, deals we won beating the best of thin film, low cost panel providers and high efficiency offers from our competitors.

In fact, it gives me great pleasure to announce today that we have signed a strategic partnership agreement with project developer RGE for supply of 66 MWs of modules over the next 9-12 months, and options for an additional 15 MWs (in total 81 MW).

This includes one of the largest projects at an old German airfield base. The project is 46 MWp and come with an Energy warranty offer by BP Solar – expressing our confidence in the performance of our products and our partnership with RGE. The CEO of RGE, Elias Issa is with us here today and will be happy to respond to any questions later on. A joint press release will be issued today as well.

Looking forward to the next five years, BP Solar expects to grow faster than market. Although we did not achieve this in the last five years, primarily because of a shortage of silicon resources, we have momentum from the last three years with a compound annual growth rate of 30%.

More recently in we sold 114MW in 2007 and 162MW in 2008. In 2009 we have the silicon resources, the manufacturing, and supply chain capability to sell 320MW assuming market availability.

And this growth will continue in 2010, when we have the reach to get to 600MW and beyond.

Our confidence is growing as we build the pipeline of projects and sales contracts to secure this volume. We have made tremendous progress in a short period of time. In the first five months of 2009, we have signed multi-year contracts for more than 300 MW, and our development pipeline stands today with a risked potential of 900 MW - all of which is targeted for delivery in next two years.

Global PV markets

All of this is of course dependent on the development of the markets. We expect Germany to remain the world’s largest market over the next three years, through continued growth in residential and small commercial but also increasingly through large-scale power development.

After this year’s slowdown vs 2008, we expect Spain to stabilise, and we are seeing impressive growth in Italy, France, Greece, and Eastern European markets stimulated by new policies.

The US market has begun to accelerate, today mainly in the utility scale segment, but also in residential and commercial. Over the next three years the US has the potential to become the world’s largest PV market, as has China which has the resources and bold plans, and could catapult over others as it did in Wind.

Although there remains a lot of uncertainty, we expect 2009 to be a flat year for the global solar market, with a return to higher rates of growth in 2010 and beyond. This picture is highly predicated on the state of the global economy, the availability of financing and the will of governments to continue to provide policy support.

And of course the rapid price decline in the cost of solar seen in the last nine months is a major factor in stimulating demand.

It is extraordinary to see the industry implement three years’ worth of price reductions in that time. This clearly helps the path to Solar grid competitiveness, but solar does not live in isolation. It must also compete with other fuels for power generation and live in a broader energy market context.

In the last nine months, we have seen oil prices decline to a third of their peak, and Coal and Gas prices - the competing fuels for electricity generation - also decline proportionately as the global economic and credit downturn impacted energy demand.

We anticipate the margin compression in Solar may trigger a consolidation in the industry displacing the higher cost players. BP Solar began its own internal consolidation last year, as we saw market conditions deteriorate. The difficult restructuring actions we took, will deliver 25% cost reduction. This is not part of a contraction or gradual exit, it is a deliberate act to make BP Solar stronger and fit for the long-term.

By focusing on competitive low cost manufacturing, and partnering with the lowest cost supply chain in the sector we will ride out the cycle and emerge larger and stronger.

For now it is not clear whether we have seen the end of the step-change price reductions, but it is very clear that customers are seeing sufficient economic incentive to cautiously return, and to regain the confidence to invest.

And as they do we have also seen a flight to ‘quality’ brands. Price is but one factor, there is also energy independence and security, and customers are increasingly not prepared to take risk on product quality.

They are also looking for differentiated offers with additional value components, and targeting those suppliers who have the financial strength to stand behind their warranties and commitments.

And the most important shift of all is the focus on the lifetime cost and stability of power system output, as both customers and financiers expect greater guarantees on system performance.

We believe the winners in the Solar PV industry in the next five years will need to have a number of key capabilities:

A leading business model, supported by innovative offers across the value chain;
Focus on power system energy performance;
Global access to customers, supply partnerships & financing;
Technology and innovation in product and manufacturing;
Scale to drive down costs, and
The stamina to withstand a volatile market-place.

There will be some niche players who focus on specific segments and technologies. BP Solar will be a mass market premium brand targeting the three key sectors we highlighted on a global scale. And so what makes us confident we can win:

Ability to secure high quality low cost manufacturing, through strategic partnerships in the supply chain;
A unique branded offer with the highest lifetime value and lowest lifetime cost;
A portfolio of exciting new technologies in the process of being commercialized and;
Heritage, experience, and track record encompassed by our strong brand.

Now I would like to turn over to Mark Kerstens, VP Global Sales & Marketing to take you through the elements of our offer.

Sales and Marketing strategy

Mark Kerstens

Thank you Reyad. Ladies and gentlemen, I’m pleased to have the opportunity to outline BP Solar’s Sales & Marketing strategy, building on Reyad’s remarks.

BP Solar has a unique set of benefits to bring to the market place, which set us apart from the competition. You will learn more about these benefits, which we call our four strategic themes, when visiting our booth at Intersolar, and we’re covering them in the hand-out material as well. These four themes are:

Dependability
Highest lifetime value
Innovative solar energy services
Strategic Partnerships

Let me cover each of these in some more detail:

1. Dependability

BP is one of the oldest, most respected and strongest solar companies in the world. To support this statement, let’s look at the facts:

BP is celebrating its 100th anniversary this year – 100 years of leadership and innovation in energy
BP is one of the world’s largest corporations, with a solid balance sheet and strong credit rating
BP is a pioneer in solar, with more than 35 years of experience
We’ve just sold our 10 millionth module, and surpassed 1 GW of installed capacity a few months ago
We offer the most credible warranty commitment, we’ve been around longer than our warranties last
If something does go wrong, we are there to address the issue, and do what is right for our customers
Our commitment to safety is industry-leading: thanks to BP’s rigorous safety training and guidelines, several installers have survived what would otherwise have been fatal accidents.

Customers can rely on BP Solar to get it right. We have been around for a long time and we intend to stay for the long-term. That is particularly important in today’s challenging economic environment.

Customers are looking for proven strong players who have already demonstrated their stamina in the market place, and who will be around, to honor their warranties, and to provide maintenance and support to the solar systems in operation.

2. Highest Lifetime Value

As an industry we need to re-adjust our thinking in terms of what really matters, for a customer to make a buying decision. It is not just about highest energy efficiency, which often comes at a cost in terms of reliability. It’s also not just about the lowest cost per Watt on the day that you buy the solar system. What really matters to customers is the lifetime cost of energy: getting the highest value over the life of the investment.

This is just as true for a residential roof owner in Bavaria who purchases a 5 kW system, as it is for a land owner in Italy who is investing in a 5 MW installation, or a utility in the US with plans for a 100 MW solar farm.

So what underpins the lowest lifetime cost energy claim?

Industry-leading module design, stringent quality, assurance, and reliability, proven in tests
Patented design features that further enhance system reliability, and
A low-cost manufacturing value chain, in-house and with industry-leading partners

I’d like to share our confidence behind these starting with

Superior testing:

One of our tests is at 250% of what is required by the IEC (International Electrotechnical Commission)
We do not launch a product on the market that does not meet our internal Q6000 standard, which is much more stringent than the IEC tests
We have done the same tests with competitor products: Only two of the 10 manufacturer’s modules analyzed would have been launched on the market by BP Solar – the rest failed our tests.

Innovations that set us apart from the competition:

We introduced a new module frame designed to resist highest wind and snow loads.
Our patented IntegraBus™ diode board ensures a more reliable electrical connection while keeping the diodes cooled, this leads to higher longevity and more reliable operation.
Our patented backsheet provides higher electrical insulation, mechanical strength and environmental resistance.
BP’s high-transmission glass with anti-reflective coating delivers proven up to 4% incremental annual energy yield.
Our modules have industry-leading low degradation rates: based on an NREL (National Renewable Energy Laboratory) study, BP’s degradation is at only 0.3% per annum, and our internal tests show even less.

3. Innovative solar energy services

BP Solar is a lot more than a supplier of solar modules. We offer our customers comprehensive and innovative solar energy packages. For example:

For residential customers, we offer our Certified Installer Program (CIP) in Germany and Australia, which differentiates BP, thanks to a comprehensive package of services and training for our installers. The certification brings peace of mind to the end consumer, as an assurance for quality of delivery. The CIP offer contains additional services to end customers, e.g. the BP Solar Service Warranty, which complements our existing product warranty.
In the Large Commercial and Utility-Scale Projects area, we offer innovative enhanced Operations & Maintenance (O&M) contracts, as well as industry-leading performance guarantees.

4. Strategic Partnerships

BP is unique in the solar industry, given that with many large customers, we already hold extensive relationships, as their energy supply partner. For example, BP is a major supplier of petrol, diesel, motor oil, electricity and natural gas to Wal-Mart. Expanding that relationship to also include solar was a logical extension for BP.

BP has very large investment program and operational financing requirements that put us in an advantaged position in building relationships with banks and financial institutions, to secure financing for solar projects.

Finally, and most importantly, we see our relationships with customers as much more than a supply agreement. We want to establish strong partnerships, based on our mutual interests, to jointly grow the business, and we are investing in such relationships for the long term.

So, to recap, there are four distinct strategic themes that set BP apart from the competition:

Dependability
Highest lifetime value,
Innovative solar energy services,
Strategic Partnerships

I’ll now hand it back over to Reyad, for his closing comments.

Reyad Fezzani:

Thanks Mark. So in summary

We will remain a leader in the industry, and strive to make solar grid competitive
We continue to invest in our solar business globally
We stand for highest lifetime value; lowest lifetime cost
We plan to grow aggressively – together with our partners maintaining the highest standards of quality
BP Solar will be the company of choice for our business partners and ambitious customers today and for the future.

Thank you, and now we will be delighted to take your questions.