Energy Generation Assets in Europe

In order to meet the political EU renewable energy objectives and accelerate the energy transition, most countries chose to set-up support schemes.

In continental Europe, several countries set-up CfD (Contract-for-Difference) or FiT (Feed-in-Tariff) schemes, financed through dedicated tax charged to the final electricity consumer. These schemes offer an above market and stable tariff for the electricity produced over 15-20 years and therefore, providing long-term visibility to investors. In Sweden and Norway, for example, certificates (Elcerts) were introduced to provide additional revenue for projects.

Over time, the subsidy schemes in Europe are progressively switching to auction systems. This has resulted in lower guaranteed tariffs for renewable electricity generation projects and selection of most economic projects and technologies. This is reducing overall cost and benefitting private and corporate customers paying for electricity, a desired and socially required outcome. Prime Capital believes that this trend also reduces regulatory risk for investors and forces market participants to contract with each other at market rates, rather than high tariffs. This resulted in significantly reduced investment costs for projects, when, for example, comparing German onshore wind to Scandinavian projects.

In summary, renewable energy projects offer investors opportunities in both on- and offshore wind, hydro and solar across various jurisdictions in Europe while enabling them to participate in the green energy transition.

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