BP Solar President Steve Westwell told Reuters in an interview that there had already been two consecutive quarters of profits, but he gave no details.

"It's a small number in the greater scheme of BP, but if we project this level into the next year BP Solar will start to look like an attractive business," he said.

"The restructuring was a big factor in BP Solar's turnaround. It got into good shape," he added.

BP, the world's second largest energy company, wrote off $45 million (24 million pounds) in 2003, when it was forced to abandon unprofitable manufacturing investments in high-efficiency photovoltaic technologies like thin film, closing two U.S. plants and cutting 260 jobs.

The restructuring reduced the size of the company, which Westwell said made it more cost-effective and efficient.

He said the turnaround was being sustained by an ongoing decrease in production costs alongside a sharp increase in global demand, largely driven by Germany.

A report by analysts CLSA Asia-Pacific confirmed that solar experienced industry-wide profits for the first time in 2004 and that market growth was some 40 percent.

With growth projected to continue at 30 percent per annum for the foreseeable future, Westwell said BP Solar planned to expand capacity in both its U.S. production plant in Frederick, Maryland, and in its European headquarters in Madrid, Spain, as it strives to compete with other major players entering its traditional markets.

"We are aiming to reach 200 megawatts capacity, up from 90 megawatts, within the next 18 months," he said.

JAPANESE CHALLENGE

Westwell acknowledged that Japan-based Sharp's entry into the European market in 2004 generated additional competition for BP Solar in a market traditionally dominated by European solar companies.

Sharp, the world's largest solar company, opened a 200 megawatt capacity facility in Wales in mid 2004.

But Westwell said that with demand soaring for solar in Europe, and supplies low, there was room for all players to operate profitably in the market.

"I expect supply demand to be tight for the next four to five years," Westwell said. "The global industry is battling to keep up with demand this year, driven mainly by Germany demand, which was stronger than anyone expected."

Although Germany and the United States would remain BP Solar's core markets, Westwell added he would not rule out entry into the Japanese market at some point in the future.

"Japan is still the world's largest market and we will remain a big global player," Westwell said.

But he added there were concerns the Japanese market could become saturated soon and would not retain its title as the world's largest solar market for much longer.

BP Solar is BP's prime investment into renewable energy and the bedrock behind its Beyond Petroleum marketing campaign.