Vestas
Per Lekander, a partner at the hedge fund Lansdowne Partners, says he's betting on wind, even though he should be "more bullish on solar."
- Lansdowne Partners is one of Europe's largest investment firms, with $1.2 billion allocated towards energy alone.
- While solar is the fastest growing source of renewable energy, Per Lekander, who manages Lansdowne's energy fund, says he's betting on wind instead.
- "I should probably be more bullish on solar, but I'm not," he told Business Insider. "I'm way more bullish on wind."
- There's a good reason to trust him: His clean energy portfolio surged 37% last year, besting the broader stock market, according to an HSBC hedge fund report.
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Over the next five years, global renewable power capacity is expected to double, according to the International Energy Agency (IEA). Solar energy alone accounts for 60% of that projected growth.
That's why it's surprising to hear that Per Lekander, a partner at Lansdowne Partners - one of Europe's largest hedge funds - is placing big bets on wind energy over solar.
"I should probably be more bullish on solar, but I'm not," said Lekander, who's been with the firm since 2014. "I'm way more bullish on wind. I think it's my highest conviction."
Lekander declined to share detail about the firm's investments on the record, but he indicated that it has positions in wind companies overseas.
There might be a reason to trust his judgment: His $221 million long-only clean energy fund he manages surged 37% in 2019, besting the broader stock market, according to an HSBC hedge fund report.
So, why wind over solar?
Solar is a fragmented industry dominated by companies in China
Solar panels on a roof at Google headquarters in Mountain View, California
Solar is the fastest-growing renewable energy in the world, according to the Center for Climate and Energy Solutions. In the US, it's projected to supply nearly half of all renewable energy by 2050, up from 11% in 2017.
Lekander doesn't deny the impending explosion of solar.
"I believe that solar is going to grow quicker than wind, at least for the next few years," he said.
It's easier to develop solar projects, relative to wind farms, he says. There's not as much NIMBYism - short for "Not in my backyard." Plus, solar is far cheaper than offshore wind, according to the International Renewable Energy Agency.
But Lekander says there are a few major drawbacks. For one, he says, Chinese companies have a huge share of the market in solar manufacturing. Solar energy is also a "fragmented" industry, he says.
"There are many, many players," he said. "I struggled to find companies which have really differentiated business models. I'm not saying I'm negative on solar - because the demand is just too strong - but it's a commodity business for now."
Then, there's wind.
The wind industry is older and more consolidated
Vestas
Wind turbines in Macarthur, Australia
The first electricity-generating wind turbine was built in the late 1800s. Sure, it probably looked nothing like the mammoth turbines of today, but it supports Lekander's point: The wind industry is old, and that's given it more time to consolidate.
"You're getting into industry consolidation, with a few leading players, and you're really starting to have differentiated business models," Lekander said.
In 2018, just four manufacturers deployed nearly 60% of the turbines: Vestas, Goldwind, GE, and Siemens Gamesa, according to Bloomberg NEF.
Plus, wind energy is better positioned for recurring profits, Lekander says, because unlike solar panels, wind turbines need to be regularly serviced.
"There is recurring business, which is not that easy to accomplish," he said.
Between onshore vs. offshore wind, Lekander's bets are on offshore, with a five-year outlook, because wind at sea often avoids the NIMBY problem, he says, and "you can have monstrously big turbines."
No matter the type of energy, however, Lekander says renewables are bound to explode.
"Our view is that this is going to go way further than people think," he said. "The speed is just massively accelerating."
This story is part of Business Insider's expanding coverage of clean energy. Do you have a tip about startups or investment firms in the industry? Please contact this reporter at bjones@businessinsider.com or through the confidential messaging app Signal at 646-768-1657.
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