Green Energy Investments: Powering Profits and the Planet in Germany
By: Sabine Wadewitz, Frankfurt
Investments flood into sustainable energy solutions
Readying for a green revolution, Germany is rolling out the red carpet for financial opportunities in renewable energy solutions like wind parks, battery storage, hydrogen transformation, and offshore wind grid connection. Politicians and economists alike see these arenas as goldmines for both businesses and investors.
Strategists and investors are on the hunt for promising prospects. "The climate transformation offers a wealth of opportunities. Green investments, infrastructure, and storage need initial hefty capital but can yield substantial returns. Setting up financing structures is essential," explains Boris Scholtka, partner and head of energy law practice at Addleshaw Goddard in Germany.
To entice investors, attention-grabbing deals are vital. "Bank credit financing won’t cut it. The demand is too high for such conventional financing methods," continues Scholtka.
Digital ventures in the energy sector are winning over customers. Scholtka highlights Octopus Energy, an innovative company that's thriving by selling sustainable electricity through digital platforms to households and businesses.
Scholtka works closely with Spanish and Portuguese firms investing in wind farms and battery storage solutions in Germany. "The alliance of renewable energy and battery storage is a tantalizing prospect for many. There's a plethora of wind farm project developers. Once contracts and grid connections are in place, the projects are swiftly sold. Interest is sky-high because foreign investors view the German onshore wind market and battery storage market as particularly enticing. Stable green energy intake is guaranteed here, while revenues rely on the lucrative floating market premium system for investors," summarizes Scholtka.
Heat pumps hold a significant piece of the puzzle, according to Scholtka. "Phasing out district heating and gas, in line with EU directives, is imperative. Yet, large-scale heat pumps are still prohibitively expensive. Scaling down for household use holds immense market potential for businesses like Vaillant, Viessmann, and Stiebel Eltron."
Seeing possibilities in hydrogen, Scholtka expects advantages in the long run. "The core network license may be vague, carrying numerous uncertainties. But in practice, it typically works out. Companies often manage to make it happen, not necessarily due to governments," he explains optimistically.
Projections for potential profit in hydrogen are hard to pin down. "We see inflated interest in financing the pipeline expansion. Foreign investors looking to bring hydrogen from third countries to Germany are intensely scrutinizing this market," Scholtka reveals. Already, tenders for hydrogen deliveries as commodities have surfaced, like those from Salzgitter AG.
Finding the connection of offshore wind to the grid integral for the energy transition's success, projects require significant investment in technology, like converters and converter platforms. Germany introduced special government programs to offset these costs in summer 2024, prompting German shipyards to enter production. Previously, converters and platforms were built mainly in Spain and Asia.
The segment lacked political backing from German shipyards in the past due to a politically-influenced environment and the absence of state support, according to Christian Finnern, Head of Germany and Sector Leader Transport at Watson Farley & Williams.
Looking ahead, Finnern foresees significant markets for shipyards, with the need for special ships like Construction Service Operation Vessels and Service Operation Vessels, as well as converter platforms, escalating sharply over the coming years. Finnern estimates that up to 100 such special ships will be required for ongoing and planned projects. By 2045, over 30 converter platforms are expected to be deployed on the German market, with each platform costing approximately 2.5 billion euros, as estimated by the Federal Ministry of Economics and Technology.
The energy connection projects appeal to several investors due to the convergence of energy, infrastructure, and transport. Finnern emphasizes, "These projects lie within the realms of 'Green Finance' and 'Sustainable Finance.' Specific classification of projects under the Taxonomy Regulation plays a critical role in gaining access to debt capital, so investors should focus on projects promoting sustainable developments."
German manufacturers seek a stronger position in global competition through political support, making way for a sustainable strengthening of the offshore sector. "Targeted promotion of related projects could lay the groundwork for a sustainable expansion of the offshore sector and bolster German companies in the long run," says Finnern.
So, what's next after the coalition's term ends? "There are early signs of increasing political backing in this regard. However, to fully unlock the market's potential, a more intense collaboration between politics and industry is required," explains Finnern.
In 2025, Germany is setting the stage for a robust investment environment in the renewable sector. As the country presses forward with the energy transition, it’s worth noting that no two wind turbines are the same and that it's not just about the big wind farms – it's about every spinning blade churning out green power that assures a sustainable and prosperous future. Now, that's a promising blend of profit and positive impact!
* Find all articles from the Year-End Issue 2024 here*
Key Insights
- Renewable Energy Expansion: Germany anticipates boosting renewable installed capacity from 6.6 GW to over 10 GW by 2030, promoting opportunities in all sectors (wind parks, battery storage, hydrogen, and offshore grid connections) and creating jobs of the future.
- Record Onshore Wind Growth: Germany is experiencing an unprecedented surge in onshore wind development in 2025, with over 4,000 MW newly approved in Q1 alone and nearly 1,000 MW installed, signifying an increase of 40% compared to the previous year.
- Offshore Wind Progress: Key projects like EnBW He Dreiht, with the world's first 15 MW Vestas turbine, are demonstrating market readiness and self-sufficient investments in offshore wind developments, without requiring state funding.
- Battery Storage Crucial for Grid Stability: As renewable power generation grows, battery storage plays a critical role in maintaining grid stability and reliability.
- Growing Interest in Hydrogen Transformation: Political backing for hydrogen as an energy carrier and storage solution is on the rise due to the need to integrate renewable energy, reduce fossil dependency, and create a sustainable energy future.
- Political Stability and Regulatory Clarity: Supportive governance and clear policy frameworks are vital in fostering investment confidence and driving the energy transition. Delays in policy or regulatory uncertainty may stifle project development.
- Boris Scholtka, an energy law expert, highlights the allure of the German onshore wind market and battery storage market for foreign investors due to guaranteed stable green energy intake and a lucrative floating market premium system.
- Scholtka emphasizes the potential for businesses like Vaillant, Viessmann, and Stiebel Eltron in the large-scale heat pump market, as phasing out district heating and gas in line with EU directives becomes necessary.
- In the hydrogen sector, Scholtka sees advantages in the long run, despite uncertainties in the core network license, as foreign investors closely scrutinize the market for hydrogen pipeline expansions.
- The offshore wind market appeals to several investors due to the convergence of energy, infrastructure, and transport, with the need for special ships and converter platforms escalating sharply over the coming years, as estimated by Christian Finnern.
- Finnern suggests that targeted promotion of related projects could strengthen the offshore sector and bolster German companies in the long run, while acknowledging the requirement for increased collaboration between politics and industry to unlock the market's full potential.
- Looking ahead, Finnern anticipates significant markets for shipyards, with up to 100 special ships required for ongoing and planned projects, and over 30 converter platforms expected to be deployed on the German market by 2045.
