March 23 (Bloomberg) -- Sven Hansen, chief investment officer of Good Energies Inc., is seeking to finance solar projects at a time when oversupply of panels and slowing demand have curbed lending to the industry.

Photovoltaic modules will become the cheapest way to generate electricity by the end of the century, with the industry set to continue growing at an annual pace of as much as 30 percent, Hansen predicts. The Zug, Switzerland-based investor owns stakes in 35 businesses, including Q-Cells SE, Germany’s largest solar company, and has a three-year budget of 1 billion euros ($1.4 billion) through 2009.

Solar projects are “excellent investments,” he said in a telephone interview from the company’s headquarters. “There’s not much that can go wrong with good projects.”

Lending to finance solar power plants with a capacity of 1 megawatt or more may decline 17 percent to 10 billion euros this year, Commerzbank AG analyst Robert Schramm wrote in a March 12 note. Solar power is currently only competitive because of state aid such as guaranteed prices. Germany, for example, obliges utilities to purchase electricity generated from modules at double the current rate of about 20 cents a kilowatt hour.

The support has made Germany the world’s largest market for solar panels, even in a country that receives half the amount of solar radiation as Spain, the European country with the greatest sun-power potential, according to a 2001 study by the European Commission.

NorSun Investment

Good Energies invests in solar, turbine-based renewables, green building efficiency and other emerging areas within clean energy. Earlier this month, it increased its stake in NorSun AS, a closely held Norwegian maker of solar panel components that is expanding production of silicon ingots and wafers for high efficiency solar cells.

“The dynamism for renewable energy has clearly improved in the last two, three years” because of higher awareness of global warming, energy security and grid parity, Hansen said.

Good Energies currently holds 12 solar investments. Publicly traded companies in which it owns a stake include Thalheim, Germany-based Q-Cells and China’s Solarfun Power Holdings Co. and Trina Solar Ltd. The trio’s stocks have lost more than 60 percent in the past 12 months.

Conergy AG, Germany’s second-largest solar company, gained 4 cents, or 12 percent, to 38 cents for its steepest increase in three months on the Frankfurt exchange. Solon SE, a Berlin-based solar module maker, rose 1.18 euros, or 14 percent, to 9.60 euros. Q-Cells added 48 cents, or 3.7 percent, to 13.63 euros.

Difficult Years

This year and next will be “difficult” for solar panel makers as financing for the construction of solar plants dries up, said Hansen.

Still, the solar industry will likely provide most of the world’s power in 100 years, according to Hansen. Radiation from the sun that shines on the earth has the potential to provide 2,850 times the current energy demands of the world’s 6.8 billion people.

Making that a reality requires slashing prices for silicon panels and making the technology competitive with coal, hydro- and nuclear power plants.

The benefits of solar power will become more evident in the coming decades as stiffer legislation on carbon dioxide emissions emerges from United Nations climate change talks and the price of fossil fuels rise, Hansen said. Costs are also falling faster than most people thought, he added.

“If a strategic investor doesn’t take advantage of the opportunities out there this year, there isn’t much hope for him.”

To contact the reporters on this story: Claudia Rach in Berlin at crach1@bloomberg.net; Jeremy van Loon in Berlin on jvanloon@bloomberg.net.

Last Updated: March 23, 2009 12:56 EDT