By Dinakar Sethuraman
(Corrects fund performance in the seventh paragraph.)
July 17 (Bloomberg) -- New solar power generation may double next year, recovering from low capacity utilization caused by the global financial crisis, as China and the U.S. increase demand for clean energy, a fund manager said.
Asian ventures led by Suntech Power Holdings Co., Trina Solar Ltd. and Canadian Solar Inc. may benefit as 10 gigawatts of electricity produced from the sun is added in 2010, from an estimated 6 gigawatts this year, said Thiemo Lang, portfolio manager at the 230 million euros ($324 million) SAM Smart Energy Fund.
“The market may not grow in capacity this year because of the negative effects of the financial crisis,” Lang said in an interview by telephone from Zurich. “Next year looks much better because we see two new regions in U.S. and China.”
New investments in clean energy may surge to $450 billion in 2012 from $150 billion in 2007 as the U.S. and Europe step up efforts to reduce emissions, Nomura Securities said. China may boost solar capacity to 10 gigawatts by 2020, enough to supply about 10 million U.S. homes, from 1.8 gigawatts now, according to the Chinese Renewable Energy Industries Association.
Suntech, the world’s largest maker of solar-power modules, and Trina Solar are among Asian companies that may gain as lower production costs give them “distinctive” advantages over manufacturers in Europe and the U.S., Lang said. Both are based in Jiangsu province in eastern China.
Shares Recovering
Suntech has gained 36 percent this year to $15.86 a share in New York, while Trina Solar has jumped 161 percent to $24.20 over the same period. Suntech is still 66 percent below its August 2008 peak of $47.81, while Trina Solar is 29 percent below its high, reached in the same month. Canadian Solar rose 108 percent this year to $13.42, still 59 percent below its August peak.
The SAM Smart Energy Fund is part of Robeco Group, a global asset manager and a unit of Rabobank Groep NV, according to an e-mail by François Vetri, a company spokesman. The fund has fallen 31 percent in the past 12 months, according to Bloomberg data, while the Bloomberg World Energy-Alternate Sources Index has declined 51 percent over the same period.
The fund owns shares in Trina Solar, Yingli Green Energy Holding Co., Canadian Solar, JA Solar Holdings Co. and Taiwan’s Gintech Energy Corp. and E-Ton Solar Tech Co., he said.
The solar panel market is oversupplied as 12 gigawatts of capacity chases 6 gigawatts of demand this year, Lang said. Producers may add as much as 50 percent more next year.
Current Capacity Glut
“In the first quarter solar utilization was only 30 percent,” Lang said. “There’s more capacity available than the market can absorb.”
The Asian suppliers were at full capacity at the end of the second quarter, while the European suppliers were operating at about 50 percent utilization, he said. Increasing use of solar power generates carbon-emission credits for polluters in Europe.
Prices of carbon credits, used by European nations to offset emissions, may stay at current levels as a contraction in manufacturing cuts demand for the credits, he said.
“I will not be amazed for prices to stay at this level,” Lang said. European Union emission permits for December delivery closed at 14.53 euros a ton yesterday on the European Climate Exchange in London. While they are up about 10 percent this month, they are down 46 percent from a year ago.
There are more opportunities to invest in Asian solar businesses compared with wind power makers as the industry has turned mature, Lang said. New wind generation capacity may expand by about 18 percent in 2010 with growth in newly installed capacity expected to be flat this year. The world added 27 gigawatts of wind power capacity in 2008.
“There are not many opportunities to invest in Asian wind companies as in solar makers,” Lang said. “Solar industry can reduce costs quite dramatically while wind turbine costs do not decline at the same pace,” he said. Electricity produced from wind and solar projects account for less than 2 percent of the global output.
To contact the reporter on this story: Dinakar Sethuraman in Singapore at dinakar@bloomberg.net.
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