Mobil Corp. announced yesterday it is shutting down its 19-year-old solar energy program, saying the solar market is small and unlikely to grow profitable for years to come.
The Fairfax-based company said that 164 people will be laid off at the company's solar demonstration plant in Billerica, Mass., and will receive severance benefits.
The company will try to sell its technology and solar subsidiary, Mobil Solar Energy Corp.
Mobil's action means that among U.S. oil companies, only Chicago-based Amoco Corp. is still in the solar business. Amoco's Solarex subsidiary is located near Frederick, Md.
A decade ago, when oil and natural gas were more expensive and the United States searched for alternate fuels, a number of oil companies set up subsidiaries to develop solar energy. But industry analysts said most of them were unable to recover research and development costs.
Mobil's photovoltaic technology -- the process of generating electricity directly from the sun's rays -- is considered to be advanced. But the company said that while its technicians had developed more efficient, less-expensive solar cells, the electric utility market for solar energy was unlikely to grow to large-scale demand in the near term.
"Our photovoltaics technology is good, but it does not provide us a reasonable business opportunity, either now or in the foreseeable future," said Allen E. Murray, Mobil's chairman and chief executive.
Mobil declined to say what its solar research and development program costs. But a Mobil spokesman, John Lord, said that for each of the 19 years the program has existed, it required a "significant financial commitment."
Lord said the company had determined that it would not be able to reach the break-even point financially before the year 2000.
John Triebe, vice president for the photovoltaic sector at Amoco, said that Amoco's Solarex subsidiary should become profitable by the end of this decade thanks to a new thin-film technology it is developing.
Triebe said the worldwide market for solar energy is about $250 million a year and that Solarex is the world's second-largest producer behind Siemens AG of Germany.
"The photovoltaics business is a good business to be in," said Triebe. "The cost of photovoltaics is going to decline and the cost of conventional energy is going to trend upward."