February 11, 2025

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European solar investment viable amid political ‘rhetoric’

European solar investment viable amid political ‘rhetoric’

“As an investor, you cut through the rhetoric, you cut through what’s being said, and you look for some level of certainty,” said DeAngelis. “Trump has created a significant amount of chaos in the US [but] it’s not that there aren’t investable opportunities, there’s a lack of focus.

“The reason that we’re here, and I think [it’s true] for most people, solar is an investment opportunity because it’s an economic power solution. It’s a jobs creator and it keeps the lights on, at the end of the day.”

“48% of infrastructure investment in the last ten years has been invested in the energy transition, broadly,” added James Samworth, partner at renewable power investor Schroders Greencoat, highlighting how clean energy has received considerable investment in the last decade, but that this trend has reversed sharply in the past couple of years, as financiers have become more selective with their investments.

“Infrastructure fundraising was down 40% in 2023-24,” said Samworth, referring to the most recent years for which there is complete data. “There is less money after every opportunity that comes along, and the value-add for the clients, and the role that any asset plays, is under more scrutiny than 24 months ago.”

‘Too much capital chasing too few opportunities’

Discussing Europe in particular, Liam Smith, director of energy infrastructure at investor Actis, said that different markets offer different opportunities for solar investors.

“One of our big mantras is two-thirds of the capital tends to chase one-third of the opportunities,” said Smith. “We took that mantra and had a look at Eastern Europe, and [saw] some of that capital had moved to those frontier markets – Poland specifically – and the cost of capital didn’t warrant the risk.

Eastern Europe was consistently described as an increasingly “mature” market at Solar Media’s Large Scale Solar Central Eastern Europe event, held last November in Warsaw, but Smith suggested that there remains significant differences in investment attractiveness within the region.

“We said this didn’t make sense for us now, and we focused on Romania and Bulgaria … interest rates have gone up, capital is scarce and the markets are correcting, especially in Europe where there was too much capital chasing too few opportunities.”

DeAngelis agreed that there have been too few opportunities; responding to an audience question about the potential for double-digit returns in solar, he said: “yes, but not in Europe”.

Storage as an investment destination

The speakers also discussed the attractiveness of storage as an investment opportunity, a common topic of discussion at industry events in recent years. When asked to rank technology types by attractiveness, Smith suggested that co-located solar and storage projects were more attractive than standalone renewable power projects.

“We are very bullish on pairing solar and storage … that’s cost competitive with gas now,” said Smith. “Just as a value proposition, it’s there. I’d then probably rank wind; yes it has the energy yield uncertainties, but the curve is, now, more attractive to buyers, so we’re seeing a lot of interest.”

Susana Leith-Smith, senior managing director and head of capital markets–EMEA at Macquarie Asset Management (MAM) said that the best investments are those that encompass a range of technologies and a range of markets, and a more diversified portfolio could better withstand some of the disruption that comes from external changes, such as financial and political disruption.

“We tend to invest in platforms that give us diversification geographically, where these projects are in their development stage and diversification across different types of products,” said Leith-Smith. “We feel it’s very important to have that kind of diversification, as it allows us to ride those [economic] waves.”

“We still love solar, as part of a broader portfolio. From a market perspective, we’ve invested in solar for a very long time [and] it’s part of a much broader strategic investment opportunity.”

Solar Media is hosting its annual Solar Finance & Investment Europe event in London on 4 – 5 February 2025. This event annually attracts infrastructure funds, institutional investors, asset managers, banks and development platforms at the forefront of European renewables; the vast majority of which are responsible for billions in active and prospective investments in the Europe’s energy transition. For more details, visit the website.

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