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Why the oil companies lost solar

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  • Miller, Damian

Abstract

Solar energy is a growing source of electricity supply. Oil companies including BP and Shell recognized this early on and entered the solar industry when it was still in its relative infancy. These companies invested heavily in vertically integrated solar companies that were at one point among the largest in the world. But neither BP nor Shell was successful, and they both decided to exit the solar market. This stands as a paradox since such companies have the funds, the long-term perspectives, the management systems, the multinational presence and the lobbying clout to potentially succeed in this new energy industry. Why were they not successful, and why did they ultimately exit? This paper uses innovation theory to explore the reasons why large incumbent corporations typically fail to succeed in commercializing disruptive innovations at scale. Evidence from semi-structured interviews and discussions with former employees of BP Solar and Shell Solar confirm the explanatory power of key constructs from innovation theory in accounting for the big oil companies' experience with solar technology. Ultimately, the findings suggest that oil companies would have done better to treat their solar businesses as separate stand-alone entities.

Suggested Citation

  • Miller, Damian, 2013. "Why the oil companies lost solar," Energy Policy, Elsevier, vol. 60(C), pages 52-60.
    • Handle: RePEc:eee:enepol:v:60:y:2013:i:c:p:52-60
    DOI: 10.1016/j.enpol.2013.05.043
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    References listed on IDEAS

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    1. Travis Bradford, 2006. "Solar Revolution: The Economic Transformation of the Global Energy Industry," MIT Press Books, The MIT Press, edition 1, volume 1, number 026202604x, April.
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    Cited by:

    1. Absi Halabi, M. & Al-Qattan, A. & Al-Otaibi, A., 2015. "Application of solar energy in the oil industry—Current status and future prospects," Renewable and Sustainable Energy Reviews, Elsevier, vol. 43(C), pages 296-314.
    2. Dadi Wang, 2017. "Benchmarking the Performance of Solar Installers and Rooftop Photovoltaic Installations in California," Sustainability, MDPI, vol. 9(8), pages 1-17, August.
    3. Derek Wang & Tianchi Li, 2018. "Carbon Emission Performance of Independent Oil and Natural Gas Producers in the United States," Sustainability, MDPI, vol. 10(1), pages 1-18, January.

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