Renewable energies defy uncertain environment: project financing continues to grow
Is the boom in solar and wind energy over? This question is being asked not only in Germany by more and more people. Immediately after taking office, Donald Trump introduced a radical change of course in US climate and environmental policy with several decrees in order to be able to extract more oil and gas. In Germany, too, the industry is facing challenges, especially due to rising costs.
Nevertheless, the financing for renewable energies at DZ BANK continues to grow. Last year, the total portfolio value rose by €564 million to €7.9 billion. At €5.8 billion, the largest share of this is attributable to Germany. Wind farms account for the largest share at 84 percent, while photovoltaic systems account for 16 percent. To a lesser extent, our portfolio also includes energy generation from biomass and gas, hydropower and geothermal energy. Currently, business development is significantly better than the public debate would suggest.
Looking ahead over the next few years, our experts expect that there will be a stronger focus on new technologies, such as projects involving battery storage. In particular, the financing of combinations of such storage systems with renewable energy plants is on the rise. “Storage solutions will play a central role in the stability of the electricity system and the power grid in the future,” says Wolfgang Meyer, head of department in the Structured Finance (SFI) division. ”We are currently seeing increasing demand for large-scale battery storage in Germany, while the development of a hydrogen economy is making only slow progress, partly for cost reasons.”
Wolfgang Meyer is critical of the expiry of the Renewable Energy Sources Act (EEG) at the end of 2026, which, among other things, regulates feed-in tariffs. Without the previous EEG framework conditions, financing will become more difficult. In mid-2024, the Federal Ministry for Economic Affairs presented various options for the “electricity market design of the future” and a possible successor to EEG funding. “The new electricity market design must be well thought out and prepared. A reliable and cost-efficient investment framework is particularly important,” says Meyer, adding: ”In our view, affordable energy is at the top of the agenda in the current coalition negotiations.”
Our international portfolio saw a stronger boost in 2024. Although it accounts for the smaller share at 2.1 billion euros, it has grown by a good 12 percent. It comprises around 55 project companies, mainly for large-scale solar, wind and geothermal plants. Larger projects are being seen in the US, UK, Canada and Australia. Despite the headwinds in the industry, a strong expansion of offshore wind energy can be seen throughout Europe – significant financing is planned in particular in France, the Netherlands and Poland.
Our colleague Moritz Keller from SFP in New York is also observing the technological trends around battery storage on the international market. “Several battery storage projects have been launched recently. Our latest financing in this area is a 300-MW battery storage park in Hagersville, Canada.” Carbon capture projects, a process that prevents carbon dioxide from entering the atmosphere, are also becoming increasingly interesting. The expansion of transmission lines, particularly in Australia, is also on the rise. With regard to developments in the US, our expert does not expect a slump in the renewable energy business. “It is possible that the new Trump administration will slow down the financing and approval of projects for the time being,” says Keller. The infrastructure for sustainable solutions has been expanded enormously in recent decades, so that investments in new plants in the US, Germany and Europe are irreversible.
