The energy transition is underway. You’d be hard-pressed to find a politician or CEO that hasn’t pledged ‘net zero’ by some specific date. But the task is huge. 

According to the United Nations, over 75% of global greenhouse gas emissions come from energy generated by fossil fuels such as coal, oil and gas. Clean energy generation is by far the most important decarbonisation solution. Enter solar energy.

This offers a clean, renewable alternative to fossil fuels, significantly reducing carbon emissions. Solar is a growth industry. Harnessing sunlight is cost-effective, with solar panel prices dropping by 89% since 2010 [1]. It is also increasingly efficient. In 2020, the US generated over 90,000 GWh of solar electricity, a 10-fold increase since 2010. Countries like China and India have embraced solar power, with China boasting the world's largest solar farm, the Tengger Desert Solar Park.

How can you invest?

We believe numerous small- and mid-cap (SMIDs) companies offer an excellent way to access the solar story. Many SMIDs deliver leading solutions in niche and fast-growing segments of the market. They are often nimbler than their larger peers and can take advantage of new opportunities. Importantly, many SMIDs are vital links in solar supply chains and systems, helping larger companies successfully deliver their business strategies.

Take Taiwan’s Sinbon. It specialises in manufacturing electronic components and providing integrated solutions for various industries, including renewable energy. Sinbon has made significant contributions to this sector through its high-quality solar junction boxes, connectors, and cables. These enable solar installations to perform at a high level, ensuring the safe and efficient transfer of generated electricity.

Another name to highlight is the US firm NEXTracker. It provides software and tracking technology to the industry’s major players. The company states its systems enhance the efficiency and performance of solar installations by optimising the capture of sunlight throughout the day, boosting energy production yields by up to 25%. This increased yield is critical in attracting investment in the clean energy sector. Additionally, NEXTracker's smart energy management platform, NX Horizon, helps improve solar plant reliability and reduces operational costs. By continuously innovating and developing cutting-edge solutions, we think companies like NEXTracker will play a crucial role in shaping the future of solar energy.

But solar has its critics. This includes the intermittent nature of solar power, which some believe hinders its ability to fully replace fossil fuels. That’s where companies like Voltronic Power come in. It makes Uninterruptible Power Supply (UPS) products that enable the continuation of power provision during outages. This provides emergency power backup for servers, cloud devices, and large industrial manufacturing buildings. UPSs are essential in many emerging economies where blackouts are a daily occurrence. On top of this, it makes components that convert DC solar power to AC electricity, enabling connection to the grid. A company that literally keeps the lights on.

Final thoughts…

Solar’s future is bright. Leading energy consultant firm DNV predicts photovoltaic (PV) and wind energy will account for 36,000 terawatt-hours a year by 2050. That’s more than 20 times today’s output. Asia will play a huge role. According to research published in Nature, Greater China is expected to account for a 40% share of global installed PV capacity by mid-century, followed by the Indian subcontinent at 17%.

Within this sector, numerous SMIDs are leading the charge, developing new technologies or supplying vital components needed to run solar plants. However, not all businesses are equal. We favour high-quality companies in this space. Many have strong balance sheet, pricing power and dominate their respective fields, giving them a competitive advantage over larger rivals. That’s why we think SMIDs create excellent long-term opportunities for switched-on investors.



Companies are selected for illustrative purposes only to demonstrate the investment management style described herein and not as an investment recommendation or indication of future performance. Past performance is not a guide to future results.


  1. Source: U.S. Energy Information Administration (EIA), "Electric Power Monthly with Data for December 2022