Investors should look for solar companies offering their products at
lower prices compared with their peers, as they are likely to emerge as winners from the
current industry crisis, a UBS fund manager told Reuters.
"Companies with either a unique offering, strong (balance sheet), healthy order book,
access to end customers and low pricing will most likely be the winners," Jan Peterhans,
manager of UBS' Global Innovators Fund, said in an interview.
He aded European solar module makers will continue to lose market share to more aggressive
Asian players who are offering their products at much lower prices.
"The Asian players in the sector have caught up — mainly through lower prices — while
the European (players) have lost ground. And this will continue for a while. In the end,
it's about costs. Modules will become a commodity."
The UBS fund has among its top 10 holdings European renewable companies such as Spanish
wind power companies Iberdrola Renovables and Gamesa Corp, as well as Wacker Chemie, a
German company that also makes silicon for the solar industry.
Wacker "operates in a part of the solar value chain where competition is not as high as in
the area of modules and installation. They are delivering high quality in a very capital-
intense business," Peterhans said.
European solar companies have already started to move production to low-cost countries as
Asian players eat into their domestic markets, but it will take time before this
translates into hard figures.
Oversupply of cells and modules as well as tight financing conditions has pushed the solar
industry into crisis, with consolidation taking place through M&A as well as dropouts, but
Peterhans hit a cautious note about what path consolidation will take in the future.
"M&A activity will be limited. It's not what the industry needs at the moment," he said.
With a value of some 400 million euros ($574.2 million), Peterhans' fund has a three-
pronged investment approach, investing in the sectors of climate change, water and
demography. Its value is up about 23 percent so far this year.
By comparison, the FTSE clean tech index and the S&P global clean energy index have gained
19 percent and 8.4 percent, respectively, during the same period.
