BP Throws More Solar Orders to JA Solar (JASO, BP)

Shares in JA Solar Holdings Co., Ltd. (NASDAQ: JASO) are up more than 5% this morning on news that the company has signed a contract with the solar division of BP plc (NYSE: BP) for an additional 100 megawatts of JA Solar’s mono- and multi-crystalline solar cells. BP had already signed a contract for 85 megawatts of JA Solar’s cells for delivery in 2010. The new deal calls for delivery through 2011.

JA Solar expects its manufacturing capacity for solar cells to reach 1,800 megawatts by the end of 2010. The company also noted in its second quarter earnings report that shipments for the first half of its current fiscal year have already surpassed total shipments for all last fiscal year.

BP is trying to put a stake in the ground as a solar project developer, and this new order should keep the solar division moving toward profitability. In the second quarter of 2009, BP posted a loss of $583 million in its other business category, which includes solar. In the first quarter of 2010, the company lost $328 million, and by the second quarter, the loss had been reduced to just $70 million. The company expects to see a profit for the second half of 2010.

In terms of capacity, during the first half of 2009, BP did just 42 megawatts worth of business. In the first half of 2010, the company more than doubled that to 112 megawatts. There is no forecast for 2011, but the deal with JA Solar indicates that BP is pressing its bets.

The deal is not a game changer for either BP or JA Solar. It is, however, additional good news for the solar sector going forward.  As far as what it means for JA Solar shares, the stock is up 5.3% at $8.74 on the day and it has traded more than 7.3 million shares (only 8.3 million is a full average day’s volume) in just over an hour of trading.

Paul Ausick