Investing in Renewable Energy in 2026: How Photovoltaics Stack Up Against Wind, Hydro, and Bioenergy
Excerpt
Anyone looking to invest in renewable energy in 2026 has four structurally very different options: solar power, wind power, hydropower, and bioenergy. Expected returns, minimum investment, tax leverage, and liquidity differ by a factor of ten. This article provides an honest assessment of the four options—using 2025 market data, a regulatory outlook, and a clear recommendation for investors with at least €100,000.
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In 2026, investing in renewable energy primarily means four avenues with very different profiles. Photovoltaics offers a 6–10% annual return on direct commercial investments starting at €100,000 in equity and is the only renewable energy source in which private investors hold a direct stake in a single plant via the inverter model. Wind power is structured through community wind cooperatives (typically 2–6%, starting at €500) or closed-end wind AIFs (3–6% projected IRR, starting at €5,000). Hydropower is scarcely available as a direct investment in Germany and is primarily represented through utility stocks such as Verbund AG (approximately 4–5% dividend yield). Bioenergy will face pressure in 2026—EEG subsidies for 4,979 biogas plants will expire by 2030, and a wave of plant decommissioning is foreseeable. For those with substantial capital who wish to leverage tax benefits, direct investment in PV is the only option that fully combines the IAB, special depreciation, and declining-balance depreciation. — Note for commercial businesses and farmers seeking their own PV system for self-consumption rather than an investment: Further down in the section on photovoltaics, you’ll find a link to the relevant funnel track.
Table of Contents
Anyone looking to invest in renewable energy in 2026 faces a fundamental decision—not whether to invest, but in which type of renewable energy. Renewable energy sources are climate-friendly sources of energy derived from the sun (photovoltaics), wind, water, and biomass: Unlike fossil fuels such as coal, oil, and gas, their resources are constantly renewable or virtually inexhaustible, and their use to generate energy produces no CO₂ emissions. They are the cornerstones of Germany’s energy transition and will already account for around 56% of net public electricity generation by 2025.
This article is intended for investors who want to diversify their portfolios and learn how they can invest in renewable energy in 2026 —and which of the four main approaches, with their respective opportunities, is the best fit for their individual situation. We compare solar power, wind power, hydropower, and bioenergy in terms of returns, risk, minimum investment, tax benefits, and liquidity. The goal is to provide a well-informed basis for decision-making—not to promote any particular asset class, but to offer an honest assessment with a clear recommendation at the end.
Why 2026 Is a Special Year for Renewable Energy Investments
Now that we’ve covered the basics, it’s worth taking a look at the current market context: Three regulatory deadlines make 2026 a transitional year—the EU state aid approval for the EEG 2023 expires on December 31, 2026 (if the EEG 2027 is not passed in time, there is a risk of a funding gap), and starting July 17, 2027, a CfD requirement will apply to new subsidized plants with a capacity of 100 kW or more. Anyone who commissions a plant in the coming months will secure the familiar feed-in tariff terms—after that, a new, less-tested regime with a refinancing requirement will apply.
Three key dates mark the year:
First: In 2025, the German photovoltaic sector surpassed lignite and hard coal for the first time, generating approximately 87 TWh of electricity—a 21% increase compared to 2024—with an installed capacity of 116.8 GWp as of the end of 2025 (Source: Fraunhofer ISE Energy Charts, as of January 1, 2026). The expansion of solar energy is thus proceeding faster than that of its regulated counterpart, wind power, which reached 132 TWh in 2025 despite a higher installed capacity—but represented a –3.2% decline compared to 2024 (a year with low wind speeds). Hydropower plummeted to 17.8 TWh (–22.5%) due to drought. Bioenergy remained largely stable at around 41 TWh, but is structurally headed for a phase-out. The energy transition is thus not proceeding uniformly—the individual energy sources are developing in opposite directions.
Second: On July 17, 2027, pursuant to EU Regulation 2024/1747, a Contracts for Difference (CfD) requirement will take effect for all newly subsidized generation facilities with a capacity of 100 kW or more. This means that any profits exceeding a fixed strike price will be returned to the government, while shortfalls will be compensated. Existing plants receiving EEG remuneration are protected under Article 14 of the German Constitution—the CfD requirement applies only to new contracts entered into after this effective date.
Third: The 2027 EEG draft bill (working draft leaked on February 27, 2026; revised BMWE draft bill dated April 21, 2026; coalition agreement reached on April 22, 2026) provides for the elimination of the fixed feed-in tariff for new installations under 25 kW; for installations above that threshold, the two-sided CfD will replace the previous market premium. The cabinet decision has been postponed several times—as of June 2026, it is scheduled for June 24, 2026, but may be postponed again. This structurally alters the return calculations for every new installation—and makes 2026 the last year in which investments can be planned under the current regulatory framework.
For investors, this means: Those who are still building under the old regime in 2026 know the rules. Those who build in 2027 and beyond will be operating in a new landscape.
Investments in Renewable Energy: A Direct Comparison of the Four Options
The four ways to invest in renewable energy—solar, wind, hydroelectric, and bioenergy—differ not only in terms of return on investment but also fundamentally in their accessibility as investment opportunities. PV is the only one of the four energy sources where private investors with at least €100,000 in equity can invest directly in a specific plant—through the Helm Group via an inverter revenue-sharing arrangement, or optionally by purchasing the entire plant. Wind power is primarily invested in through cooperatives or funds. Hydropower is practically only available through stocks. Bioenergy is invested in through high-risk direct investments.
Across all four forms of energy, there are five typical investment types and products that are relevant to the following sections:
Direct investment: Purchasing a facility outright or a share in it. Highest minimum investment (typically €50,000–€200,000), longest term (20–40 years), full tax benefits — most commonly available for solar power.
Closed-end funds / AIFs under the KAGB: Investment in a project company that bundles multiple investments. Minimum subscription of €5,000–25,000, term of 10–15 years, illiquid.
ETFs (exchange-traded funds): Daily liquidity, minimum investment starting at €25 per savings plan, but high volatility and no direct ownership of underlying assets.
Crowdfunding / Subordinated loans: Low entry barrier (€100–500), high default risk, subordinated in the event of insolvency.
Cooperative shares / community-owned energy: Membership in a cooperative with one vote per member; shares typically range from €500 to €5,000; focus on local economic development rather than maximizing returns.
| Feature | Photovoltaics | Wind power | Hydropower | Bioenergy |
|---|---|---|---|---|
| Share of the electricity mix in 2025 | ~16% (87 TWh) | ~30% (132 TWh) | ~4% (17.8 TWh) | ~9% (41 TWh) |
| Growth in 2025 vs. 2024 | +21 % | –3,2 % | –22,5 % | ±0 % |
| Is direct investment possible? | Yes, starting at €100,000 | Limited | Practically no | Rare, high-risk |
| Typical minimum investment | €100 (crowdfunding) – €100,000 (direct) | €500 (cooperative) – €5,000 (AIF) | only through a stock savings plan | €5,000–€25,000 (AIF) |
| Expected annual return | 6–10% (Direct Investment) | 2–6% (community-owned wind farm) / 3–6% (AIF) | 3–5% dividend | aktuell hochvolatil, oft < 4 % |
| Tax Incentives: IAB + Special Depreciation | Fully usable | In part, depending on the design | No | Partly |
| Duration | 20–40 years old | 15–25 years old | unlimited (share) | 10–20 years |
| Source: Compiled by the author based on data from Fraunhofer ISE, BNetzA, BWE, BDEW, DGRV, and the Helm Group · As of June 2026. Return figures are not guaranteed. | ||||
Photovoltaics: A Growth Engine with Direct Investment Opportunities
By 2025, photovoltaics had become the most important renewable growth technology in Germany and is the only renewable energy source to offer an established direct investment model for high-net-worth private investors. Anyone contributing €100,000 or more in equity can invest directly in the revenue generated by a specific PV system through one or more inverters (optionally, it is also possible to purchase the entire system)—with full use of tax leverage and a 6–10% annual return.
Market Momentum 2025
With 87 TWh of energy generation (grid plus self-consumption) and 116.8 GWp of installed capacity by the end of 2025, Germany has exceeded its EEG target for 2025 (115 GWp). Gross capacity additions totaled 16.2 GWDC—driven by large ground-mounted solar parks and commercial rooftops. Unlike with wind power, the regulatory hurdles for solar energy are lower, implementation times are shorter (typically 6–18 months for commercial PV, 2–4 years for ground-mounted systems), and public acceptance is higher. Accordingly, demand for commercial PV solutions is steadily gaining momentum.
Investing in renewable energy through solar power: Here are four ways to do it
Anyone interested in investing in renewable energy through photovoltaics has several options for participating in the market:
Direct investment through a commercial PV system or a share in an inverter (typically requiring at least €100,000 in equity, with a term of 20–40 years and an annual return of 6–10% according to Helm portfolio data for 2024)
Closed-end PV funds (AIF, starting at €5,000–€25,000, expected return 3–6%)
Solar crowd investing via subordinated loans (starting at €100–500, high risk)
Solar ETFs such as the iShares Global Clean Energy ETF or the Invesco Solar ETF (liquid on a daily basis, but structurally volatile—see Section 11)
For a detailed comparison of the four PV models, please refer to our guide on direct PV investment and how it differs from funds, crowd investing, and ETFs. We describe the structured option with inverter revenue sharing on the investor landing page.
Note for businesses: If you are not looking for an investment opportunity but rather a solar power system for your own use at your business (logistics, manufacturing, agriculture), the " Solar Power System for Your Business " section of the funnel will guide you to the appropriate consulting services.
Current compensation rates (effective Feb. 1–July 31, 2026, BNetzA)
≤ 10 kWp: Partial feed-in 7.78 ct/kWh · Full feed-in 12.34 ct/kWh
10–40 kWp: Partial feed-in 6.73 ct/kWh · Full feed-in 10.28 ct/kWh
40–100 kWp: Partial feed-in 5.50 ct/kWh · Full feed-in 10.35 ct/kWh
Semi-annual reduction: –1%. Next reduction: August 1, 2026. Guarantee period: 20 years pursuant to Section 25 of the EEG 2023.
So much for photovoltaics as the most accessible form of investment. In the next section, we’ll take a look at Germany’s largest renewable energy source—wind power—and the challenges it poses for individual investors.
Wind Power: Community-Owned or Closed-End Fund
Wind power is Germany’s largest source of renewable electricity and thus the most important energy source for the energy transition; however, private investors can only invest in it indirectly—either as a member of a community wind farm cooperative (starting at €500, typically yielding a 2–6% return) or as a limited partner in a closed-end wind AIF (starting at €5,000, prospectus forecast 3–6% IRR). Direct purchase of turbines by private individuals is the exception. In 2025, all four BNetzA tender rounds were oversubscribed—the market is seeing strong institutional growth.
Market Trends 2025/2026
Onshore wind achieved an expansion of approximately 4.5 GW in Germany in 2025 — installed capacity at the end of 2025: 68.1 GW (Source: BNetzA, BWE analysis). The four BNetzA tender rounds in 2025 were consistently oversubscribed; in total, over 14,445 MW of onshore wind capacity was awarded. The volume-weighted award prices fell steadily: 7.00 ct/kWh in February, 6.06 ct/kWh in November. The maximum value for 2026 was set at 7.25 ct/kWh (–1.36% compared to 2025).
Structural problem: Despite this boom, wind power fell short of its 2025 electricity generation target by 3.2% due to unfavorable wind conditions—volatility is significantly higher than with solar power.
Community-owned wind farms and energy cooperatives
There are approximately 1,000 energy cooperatives in Germany with around 220,000 members, who have collectively invested €3.6 billion (Source: DGRV Annual Survey 2025). The largest examples:
Forstenrieder Park Community Wind Farm (Munich): 6 wind turbines (wind power plants), 33 MW, developed by BENG eG and EGF; €2.4 million in community capital fully subscribed in two days (2024). Subordinated loan model with a minimum investment of €1,000 and a maximum investment of €25,000 per member.
Attendorn Community Wind Farm: €500 investment share, projected minimum return of 6% per annum (Q2 2025).
Pfaffenhofen Citizens' Energy Cooperative: Project returns ranging from 3% (wind) to 8% (special projects).
Bürger-Energie-Syke (Lower Saxony): Current return of 2% following a multi-year start-up phase.
Cooperatives have a key advantage: low barriers to entry and voting rights (1 member = 1 vote, regardless of the number of shares held). The trade-off: expected returns are significantly lower than those of direct investments, as social impact goals and local value creation are prioritized over pure profit maximization.
Closed-end wind AIFs
Closed-end wind power funds under the KAGB are typically offered with a minimum subscription of €5,000–25,000; in the premium segment, the minimum is €50,000 and up. According to prospectus projections, the expected return is 3–6% IRR, often with a significant premium (up to 5%) and soft costs (up to 25% of the investment amount over the term). Historically, closed-end wind funds have often delivered significantly below target—the industry is familiar with prominent cases in which the projected return was never achieved (source: trade publication Versicherungsbote, attorney Patrick Elixmann on wind power fund performance).
What Investors Should Look For
For cooperatives: voting rights structure, obligation to make additional contributions (generally excluded), dividend history for the past 5 years
For AIFs: Prospectus review in accordance with BaFin regulations, the initiator’s track record, level of soft costs, planned geographic distribution
General: Mandatory direct sales for systems of 100 kW or more, market price risk after the end of the EEG feed-in tariff period, suitability for repowering
Wind power, therefore, requires either a cooperative or a fund. In the following section, we will see that hydropower is even more difficult for individual investors to access directly.
Hydropower: Stable, but largely inaccessible
Hydropower will account for only about 4% of Germany’s electricity mix in 2025—and is virtually inaccessible to individual investors as a direct investment. There is virtually no potential for new construction in Germany, and the installed capacity of 5.9 GW has been stagnant for years. Investors most commonly gain exposure to hydropower through shares in international utilities—Austria’s Verbund AG offers a dividend yield of around 4–5%, but is highly weather-dependent.
Why Germany's Economy Is Barely Growing
Germany’s river systems are largely developed. Water permits are difficult to obtain, and environmental requirements (fish passageways, riverbed dredging) drive up the costs of new construction and modernization. Notably, in 2025, generation plummeted by 22.5% to 17.8 TWh due to drought—a climate risk that is underestimated.
Nevertheless, hydropower plays a significant role at the regional level: In Bavaria and Baden-Württemberg, it accounts for 8–16% of the regional electricity mix (Source: BDEW, Data and Charts on Hydropower Generation).
How Individual Investors Can Still Invest
Verbund AG (ATX, ISIN AT0000746409): Austria’s largest utility company, with 86% of its electricity generation coming from hydropower. Dividend for fiscal year 2025: €3.15 (including a special dividend of €1.15). At a share price of around €60 in June 2026 (end of May 2026: €59.90, about 13% below the 52-week high of €69), this corresponds to a dividend yield of around 5.0–5.3% including the special dividend (excluding the special dividend, approx. 3.3%). The P/E ratio stands at around 14.5. Important to note: Generation in 2025 fell significantly due to low water levels, and the first quarter of 2026 also remained weak (EBITDA –26%)—the stock reacts directly to precipitation data.
Additional options:
Statkraft (Norway): State-owned, not publicly traded — private investment not possible
BKW AG / Axpo (Switzerland): Hybrid utility with a hydroelectric component
EVN (Austria): Utility company with hydroelectric power generation
Hydro-Québec (Canada): State-owned
International hydropower funds: dominated by institutional investors (e.g., Allianz, Macquarie) — not available to retail investors
What Makes Hydropower a Unique Investment
Advantage: Very long asset lifespan (50–100 years), predictable cash flows in normal years
Disadvantage: Virtually no growth potential in Germany, high regulatory barriers, climate risk due to drought
Conclusion: For German retail investors, utility stocks serve more as a diversification tool than as a genuine investment in renewable energy.
While hydropower is structurally stable but offers few direct investment opportunities, the fourth renewable energy source—bioenergy—faces a very different challenge: political and regulatory risks that overshadow returns.
Bioenergy: Political risks overshadow returns
By 2025, bioenergy will account for approximately 41 TWh, or about 9% of Germany’s electricity mix, making it larger than hydropower—but it faces structural pressures. By 2030, 4,979 biogas plants and 180 biomethane plants will reach the end of their 20-year EEG subsidies. A wave of plant closures looms, as the 2025 Biomass Package only partially extends the subsidies. Direct investments are currently highly risky.
The Structural Situation in 2026
There are more than 9,500 biogas plants in operation in Germany. By 2030, 4,979 of these plants, plus 180 biomethane plants, will no longer be eligible for EEG subsidies because their 20-year feed-in tariff guarantee will expire (Source: Bundestag response dated December 11, 2024, Document No. 20/14210).
The 2025 Biomass Package (adopted by the Bundestag on January 31, 2025, published in the Federal Law Gazette on February 24, 2025, and approved by the EU as state aid in September 2025) has responded: The tender volume was increased to 1,300 MW in 2025 and to 1,126 MW in 2026. The flexibility surcharge rose from 65 to 100 €/kW of installed capacity. Nevertheless, the industry does not expect the situation to stabilize.
A DLG survey conducted by agrarheute in November 2024 revealed that 77% of the biogas plant operators surveyed were considering shutting down their facilities in 2025. In September 2025, energiezukunft.eu reported that approximately 700 plants with a total capacity of 400 MW were at immediate risk of closure.
What this means for investors
Direct investments in biogas plants are not the market a new investor should enter in 2026. The structural risks are:
Substrate cost risk: The corn husk content was reduced from 35% to 30% by weight in 2025, and to 25% in 2026 — facilities must switch to alternative inputs
Political risk: Competition for farmland with food crops remains a politically contentious issue
Funding risk: Even the 2025 Biomass Package only partially replaces the lost funding; competition in the tenders is intensifying
Economic situation: Existing plant operators are struggling to keep up, and new investments are rare
The investment options that still work today are very limited: individual bioenergy cooperatives and, very rarely, biomass AIFs. Expected returns are highly volatile and, in many cases, below the rate of overnight money.
We have now examined each of the four forms of return individually. In the next section, we will look at a factor that often makes the biggest difference between gross and net returns: tax leverage.
Comparison of Tax Leverage
The key difference in returns among the four renewable energy investment options lies not in the underlying return, but in the tax incentives. Only commercially structured direct investments—PV or comparable wind power investments under the Renewable Energy Sources Act (EEG)—can fully utilize the investment deduction under Section 7g(1) of the Income Tax Act (EStG), the special depreciation under Section 7g(5) of the EStG, and the declining balance depreciation under Section 7(2) of the EStG. ETFs, cooperative shares, and crowd investing do not have this leverage.
The three policy levers in detail
Investment Deduction (IAB) under Section 7g(1) of the German Income Tax Act (EStG): Up to 50% of the estimated acquisition costs may be deducted from taxable income in the year prior to the investment. Maximum amount: €200,000 per business. Profit threshold for the eligible business: €200,000. Investment period: 3 years.
Special depreciation under Section 7g(5) of the Income Tax Act (EStG): An additional 40% of the acquisition cost reduced in accordance with the IAB method, which may be freely allocated to the year of acquisition and the following four fiscal years. The rate was doubled from 20% to 40% by the Growth Opportunities Act of 2024 (Federal Law Gazette I 2024 No. 108).
Declining-balance depreciation under Section 7(2) of the German Income Tax Act (EStG): Reintroduced by the Investment Booster Program — 30% of the remaining book value for assets commissioned between July 1, 2025, and December 31, 2027 (Federal Law Gazette I 2025 No. 161). For photovoltaic systems with a 20-year useful life, this effectively results in a peak depreciation rate of approximately 15% per annum — for battery storage systems with a 10-year useful life, the full 30% rate is achieved.
Who can use which lever
| Type of investment | IAB §7g(1) | Special depreciation under Section 7g(5) | Declining-balance depreciation under Section 7(2) | Withholding tax |
|---|---|---|---|---|
| Commercial PV direct investment > 100 kWp | Yes | Yes | Yesthrough December 31, 2027 | Nobusiness income |
| Wind AIF (Limited Partnership, Commercial) | Per design | Per design | Per design | Nobusiness income |
| Community Energy Cooperative | No | No | No | Yeson dividends |
| ETF / Utility Stocks | No | No | No | Yeswith a 30% partial exemption for equity ETFs |
| Crowdfunding (subordinated loans) | No | No | No | Yeson interest |
| Source: Sections 7, 7g of the Income Tax Act (EStG); Section 3, No. 72 of the Income Tax Act (EStG); Investment Income Tax Act (InvStG). Simplified explanation; not tax advice—the actual treatment depends on the specific structure. | ||||
You can find a detailed sample calculation with specific figures for a €100,000 investment in our article on tax incentives for direct PV investments—specifically, the IAB, special depreciation, and declining-balance depreciation in combination.
Risk profiles in direct comparison
The four renewable energy sources carry very different risks—some are technical (weather, output), some are regulatory (EEG phase-out, CfD requirement), and some are political (public acceptance, debates over subsidies)—and the key is to manage them proactively. Photovoltaics has the most predictable risk profile overall—solar radiation fluctuates by only about 10–15% annually, whereas wind generation in 2025 was down 3.2% from the previous year, and hydropower actually declined by 22.5% in 2025.
| Risk | Photovoltaics | Wind power | Hydropower | Bioenergy |
|---|---|---|---|---|
| Weather/Yield Volatility | Low±10–15% | Medium±15–25% | High2025: –22.5% | Lowstable |
| EEG Phase-out: December 31, 2026 | Medium | Medium | Low | High |
| CfD requirement effective July 17, 2027 | Medium | Medium | Low | Lowexcept |
| Regulatory risk | Low | High3–7 years | High | Medium |
| Acceptance / Wave of lawsuits | Low | High | Low | Medium |
| Negative electricity prices | Funds573 h 2025 | Medium | Low | Lowadjustable |
| Rating: Low = manageable, Medium = should be taken seriously, High = structurally high. Sources: BNetzA, AGEE-Stat, Fraunhofer ISE · As of June 2026. Not investment advice. | ||||
In 2025, 573 hours of negative wholesale prices were recorded in Germany (Source: Federal Network Agency, Electricity Market Data 2025)—a significant increase compared to 457 hours in the previous year. For non-dispatchable generators (PV, wind), this means lost revenue during the most unfavorable hours. Hydropower and biogas plants can reduce output or pause operations during these hours.
Bankruptcy Cases: What Can Go Wrong
The history of renewable energy investments includes documented cases of total loss—particularly in solar crowdinvesting and poorly structured closed-end funds. Anyone wishing to invest in renewable energy should be aware of these examples: Sonneninvest Deutschland (insolvency 09/2024), te Solar Sprint IV (BaFin warning 05/2022, insolvency July 2022), UDI Group (multiple insolvencies), Prokon (2014, 75,000 affected investors).
In many insolvency cases, three patterns recur: investors’ subordinated claims in the event of insolvency, a lack of transparency regarding the use of funds, and excessive soft costs. The most significant documented cases:
Sonneninvest Deutschland GmbH & Co. KG (Erfurt): Preliminary insolvency proceedings were initiated on September 24, 2024, at the Erfurt Local Court (Case No. 171 IN 290/24). The parent company, Sonneninvest GmbH (Vienna), had bankruptcy proceedings opened against it by the Vienna Commercial Court on September 12, 2024. Some investors lost their entire investment.
te Solar Sprint IV GmbH & Co. KG: Filed for insolvency on May 2, 2022; BaFin publication pursuant to Section 11a of the German Investment Act (VermAnlG) on May 12, 2022; insolvency proceedings commenced on July 4, 2022 (Leipzig Local Court, Case No. 401 IN 800/22). Investors faced the risk of total loss.
te Solar Sprint II and III: On December 10, 2021, BaFin ordered the reversal of transactions due to unauthorized deposit-taking activities.
UDI Group: Multiple bankruptcies — UDI Energie Festzins III–IX, UDI Energie Mix Festzins, te energy sprint I, UDI Immo Sprint.
Prokon: Insolvency in 2014, 75,000 investors affected — to this day, the most prominent example of a failed profit-sharing model in the renewable energy sector.
What investors can learn from this:
In the event of insolvency, subordinated loans and profit participation rights must be repaid before equity investors but after all other creditors —the risk of total loss is very real
BaFin publications under Section 11a of the German Investment Act (VermAnlG) serve as an early warning signal that every investor in crowdinvesting structures should review before subscribing
High advertising costs (often through influencer channels) frequently indicate high soft costs for the media
The liability structure of the contracting party (GmbH vs. KG vs. registered business entity) is a key factor in determining the risk profile
Renewable Energy ETFs: Why They Fall Short Structurally
Anyone who wants to invest in renewable energy through ETFs is buying securities from solar, wind, and battery storage companies—not the electricity itself. The result: high volatility due to fluctuations in valuation, with little correlation to actual investment returns. The iShares Global Clean Energy ETF (ICLN) has delivered a return of –4.13% per year over five years, while the Invesco Solar ETF (TAN) lost over 50% combined in 2023 and 2024. So, anyone looking to invest in these energy forms as a sector investment is not investing in the business model of electricity generation, but rather in the stock markets’ expectations regarding it.
The two best-known clean-energy ETFs serve as a prime example of why sector-specific thematic ETFs are structurally weak:
Renewable Energy Funds at a Glance: ETFs vs. Closed-End AIFs
Before we take a closer look at these two index ETFs, here’s a brief overview: Renewable energy funds come in two varieties—exchange-traded ETFs that track a sector index (daily liquidity, low minimum investment starting at €25/savings plan, high volatility), and closed-end special AIFs under the KAGB that invest in individual real-world wind or solar projects (10–15-year lock-in period, €5,000–25,000 minimum subscription, prospectus forecast 3–6% IRR). Both types of vehicles are purely capital investments without the tax leverage of a direct commercial investment.
iShares Global Clean Energy UCITS ETF (INRG / ICLN)
ISIN IE00B1XNHC34, TER 0.65%
Fund size as of May 2026: $4.44 billion, approximately 107 holdings
Performance NAV (Fact Sheet as of March 31, 2026, ICLN US):
1 year: +62.45% (recovery)
3 years per annum: –1.17%
5-year annualized return: –4.13%
10-year annualized return: +8.92%
52-week range for INRG.L: 506.00 to 914.50 pence — range ±45%
3-Year Standard Deviation: 24.18%
Update June 2026: The recovery has continued—ICLN is trading at around $21 in mid-June 2026, up about 27% since the beginning of 2026. However, the short-term rally does nothing to change the structural 3- and 5-year weakness (–1.17% and –4.13% per annum, respectively)—on the contrary, it underscores the high volatility.
Invesco Solar ETF (TAN)
29 holdings, with a heavy focus on Nextracker, First Solar, Sunrun, and Enphase
Annual performance: 2020 +233.9%; 2021 –25.10%; 2022 –5.24%; 2023 –26.79%; 2024 –37.62%; 2025 +48.31%
MSCI World Index: 2024 +18.67%; 2025 +21.09%
Why ETF performance is so volatile
Stock prices of renewable energy companies react to market expectations—political signals from Washington (Inflation Reduction Act), Fed interest rate expectations (higher rates reduce the net present value of future cash flows), and fluctuations in module prices from China. The actual electricity production of the plants is irrelevant to the share price. This makes ETFs an asset-class investment rather than an investment in actual electricity generation.
For investors without significant tax leverage and with daily liquidity needs, ETFs can still make sense—as a small sector allocation (5–10% of the portfolio), not as a primary investment.
Outlook: Geothermal Energy, Hydrogen, Repowering
Three renewable energy sectors will be discussed as “topics of the future” in 2026—geothermal energy, hydrogen, and the repowering of existing wind and solar power sites. While these sectors are currently not readily accessible to individual investors, they are gaining importance and could open up new investment opportunities in the next 5–10 years.
Geothermal energy: Accounts for less than 0.1% of the electricity mix, but plays a much more significant role in the heating market. The Upper Bavarian Molasse Basin has 25 deep geothermal plants, 7 of which generate electricity. Bavaria is providing an additional €8.5 million in funding for the Geothermal Alliance (resolution dated December 30, 2024). The Eavor Loop pilot project in Geretsried (closed system) has been in operation since summer 2025. There is currently no established investment opportunity for private investors.
Hydrogen: There are virtually no direct investment options for individual investors—the investment story revolves around stocks (Plug Power, Nel ASA, Linde) and is highly volatile. The Global X Hydrogen ETF lost 33% in 2024 and gained 43.8% in 2025.
Repowering: A growth market for existing wind and solar power sites. Some closed-end AIFs specialize in this sector, with expected returns of 4–7%. Site availability is limited.
What makes photovoltaics a good investment?
Anyone looking to invest specifically in renewable energy in 2026 and able to commit capital of €100,000 or more will find that direct investment in photovoltaics is the only renewable energy option with five unique structural features: Inverter-based revenue sharing from a specific system (with the option to purchase the entire system), full tax benefits from IAB plus special depreciation plus declining-balance depreciation, a term of 20–40 years, a predictable expected return of 6–10% per annum—and, depending on the contracting party: personal liability of the owner instead of the limited liability of a GmbH.
Five Reasons to Invest in Renewable Energy — with a Focus on Solar Power
When comparing the four renewable energy sources as asset classes from a structural perspective, five key areas emerge in which photovoltaics outperforms other sources:
Access to a specific, physical facility. In the case of wind power, private investors are either members of a cooperative or limited partners in a fund. In the case of hydropower, they are shareholders of a publicly traded utility. In bioenergy, direct investments are rare and risky. Only in the case of PV is there an established model in which, with a minimum of €100,000 in equity, an investor can acquire a share of the inverter’s output from a specific plant (or, optionally, the entire plant).
Full tax leverage. Only direct investments structured as commercial ventures can combine the IAB (50%), special depreciation (40%), and declining-balance depreciation (limited until December 31, 2027). For installations of 100 kWp or more, this leverage can be fully utilized—and typically increases the after-tax return by 30–50% compared to the gross return.
Predictable returns. Annual variations in solar radiation are only about 10–15%—significantly less than those in wind speeds (2025: 3.2% below the previous year) or water flow (2025: 22.5%). With a 20-year EEG feed-in tariff guarantee, cash flows are predictable.
Long lifespan, long-term value creation. PV systems are technically designed to last 25–30 years; direct marketing through power purchase agreements or market premiums can extend the revenue generation period to 30–40 years. Closed-end AIFs typically run for only 10–15 years, and cooperative shares are less flexible. For a long-term, sustainable investment, this represents a structural advantage over typical securities investments with a shorter investment horizon.
Contractual Partner Structure. Within the Helm Group, the contractual partner for direct PV investments is mediplan Helm e.K. — a registered business entity with personal and unlimited liability of the owner pursuant to Sections 1, 17, and 19 of the German Commercial Code (HGB). This is the clearest sign of trust in the German market: The owner is liable with his or her personal assets, not—as is customary with GmbHs—only with the company’s assets. In the documented insolvencies (Sonneninvest, te Solar Sprint, Prokon), the contractual partners were always GmbH or KG structures—with correspondingly limited liability.
If you’d like to learn more about the full process and the individual steps—from the initial consultation to commissioning—you’ll find a detailed overview on our Pillar page: Learn more about PV investments now →
If you want to determine specifically whether a direct investment in solar power is right for your situation
The structural advantages of photovoltaics over wind, hydro, and bioenergy can only be fully realized if the individual’s capital, tax, and investment strategies are aligned. Investors with business income, a marginal tax rate of 42% or higher, and investment capital of €100,000 or more benefit the most—especially as long as the declining balance depreciation method remains in effect through the end of 2027 and the EEG subsidy framework is still in place before the transition to CfDs. If you’d like to specifically assess whether a direct PV investment with inverter revenue sharing and owner liability through the Helm Group is a good fit for your situation, please schedule a no-obligation initial consultation via our contact form or by email. In about 30 minutes, we’ll clarify your return expectations, tax leverage, and investment preferences—before any binding commitments are made.
This article is intended solely for general informational purposes and does not constitute investment, tax, or legal advice. Return figures are based on historical data and are not a guarantee of future results. For advice tailored to your individual situation, please consult a licensed financial or tax advisor. The contractual partner for PV direct investments within the Helm Group is mediplan Helm e.K. (a registered business entity with personal liability of the owner pursuant to Sections 1, 17, and 19 of the German Commercial Code (HGB)). As of June 2026.
This article is intended solely for general informational purposes and does not constitute investment, tax, or legal advice. Return figures are based on historical data and are not a guarantee of future results. For your specific situation, please consult a licensed financial or tax advisor. The contractual partner for PV direct investments within the Helm Group is mediplan Helm e.K. (a registered merchant with personal liability of the owner pursuant to Sections 1, 17, 19 of the German Commercial Code (HGB)). As of May 2026.
FAQ
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Investments in renewable energy combine four factors that rarely come together in a single asset class: First, they actively contribute to the energy transition and the reduction of CO₂ emissions. Second, they offer predictable cash flows from actual electricity generation, for which demand is growing structurally. Third, renewable energy investments have a low correlation with traditional equity and bond markets, thereby stabilizing a portfolio. Fourth, regulatory deadlines in 2026/2027 (EEG phase-out, mandatory CfDs) are transforming the market so significantly that current investment decisions can yield long-term benefits. These factors make renewables a classic real-asset investment with a social dimension. This information does not replace individual investment or tax advice.
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That depends on your capital budget and tax profile. If you have a small budget and need daily liquidity, ETFs or shares in community energy cooperatives are a good option. With business income and at least €100,000 in equity, a direct PV investment is the only renewable energy option that fully utilizes all three tax incentives (IAB, special depreciation, and declining balance depreciation). This information does not replace individual investment or tax advice—please consult a licensed tax advisor.
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There are three categories: exchange-traded funds (ETFs) such as the iShares Global Clean Energy or the Invesco Solar ETF; closed-end specialized alternative investment funds (AIFs) (regulated under the German Investment Act, KAGB) focused on wind, solar, or repowering, typically with minimum investment amounts of €5,000–25,000; and internationally active institutional hydropower funds, which are generally not accessible to retail investors. ETFs are liquid on a daily basis but structurally volatile. Closed-end AIFs tie up capital for 10–15 years and often have high soft costs—a review of the prospectus is mandatory. Return figures are based on historical data and are no guarantee of future results.
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Direct investments in commercial solar power systems typically yield 6–10% per annum before taxes (Source: Helm Group, 2024 portfolio data). Citizen wind cooperatives usually yield between 2% and 6%, while closed-end wind AIFs project an IRR of 3–6%. Shares in hydropower utilities such as Verbund AG deliver a dividend yield of 4–5%. Bioenergy investments are currently highly volatile. Return figures are based on historical data and are not a guarantee of future results.
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A community energy cooperative allows membership with a share purchase of €500–5,000, granting one vote per member (regardless of the share amount). Expected returns are moderate (2–6%), but the focus is on local value creation and acceptance. A closed-end wind AIF under the KAGB is a pure investment vehicle with a typical minimum subscription of €5,000, a 10–15-year term, and a projected IRR of 3–6%. Soft costs and front-end loads can amount to up to 25% of the investment amount over the term.
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Existing plants with ongoing EEG feed-in tariffs are protected under Article 14 of the German Basic Law—they will continue to receive their guaranteed payments until the end of the 20-year subsidy period. The EU state aid approval for the EEG 2023 expires on December 31, 2026; after that, a CfD requirement applies to new plants of 100 kW or more (effective July 17, 2027, pursuant to EU Regulation 2024/1747). Those who connect to the grid in 2026 under the old subsidy regime will still benefit from the familiar terms—new installations starting in 2027 and beyond will be calculated under a new, less-tested framework.
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In the case of a sole proprietorship (e.K.), the owner is personally and fully liable with all of his or her personal assets (Sections 1, 17, 19 of the German Commercial Code (HGB)). In the case of a limited liability company (GmbH), liability is limited to the company’s assets—in the event of insolvency, investors receive only a pro rata share of the remaining assets. In the documented solar insolvency cases (Sonneninvest 09/2024, te Solar Sprint IV 2022, Prokon 2014), the contracting parties were always GmbH or KG structures. Personal owner liability is therefore the clearest structural signal of trust in the market for direct PV investments. The contractual partner for direct PV investments within the Helm Group is mediplan Helm e.K. (a registered merchant with personal owner liability pursuant to Sections 1, 17, 19 of the German Commercial Code (HGB)).
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For investment amounts under €25,000, with no business income and a need for daily liquidity, ETFs are a sensible addition to a sector-diversified portfolio—typically 5–10% of the portfolio. On the other hand, those with a marginal tax rate of 42% or higher, who are self-employed, and who can tie up €100,000 in capital for the long term are better off after taxes with a direct PV investment in almost all scenarios. This information does not replace individual investment or tax advice.
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By 2026, renewable energy will be considered a distinct asset class with low correlation to traditional stock and bond markets, combining financial returns with environmental sustainability. Those seeking to invest sustainably typically combine several components: a broadly diversified ETF as a liquidity anchor (5–10%), tangible assets such as direct investments in solar PV for inflation hedging (core positioning), and, where appropriate, cooperative shares for local value creation. Germany’s energy transition is making photovoltaics the fastest-growing energy source—those seeking renewable energy investments as a long-term wealth-building component will find the most predictable cash flows here. An in-depth guide to direct PV investments and their tax advantages is available on the Pillar website.
References
Fraunhofer ISE Energy Charts — Electricity Generation in 2025 (PDF, as of January 1, 2026)
Federal Network Agency — Press Release: Electricity Market 2025 (January 2026); EEG Tender Results 2025 (February/May/August/November); Setting of the Maximum Value: December 16, 2025
Federal Statistical Office — Press Release: Electricity Generation in 2025 (March 26, 2026)
Federal Network Agency (SMARD) — Negative Wholesale Prices in 2025: 573 hours (Electricity Market Data 2025)
Netztransparenz.de — Market value of solar power in 2025: 4.508 ct/kWh (annual average)
German Wind Energy Association (BWE) — Press Release: Tender Volume for 2025 (December 2025)
BDEW — Hydropower in Germany (Data and Charts, as of 2025)
DGRV — 2025 Annual Survey of Energy Cooperatives
German Bundestag — Printed Paper 20/14210 on Biogas Subsidies (December 11, 2024)
BMEL / FNR — Biomass Package 2025 (Bundestag resolution of January 31, 2025, Federal Law Gazette of February 24, 2025, EU approval in September 2025)
BlackRock — iShares Global Clean Energy ETF Fact Sheet (as of March 31, 2026) and NAV Data (June 2026)
YCharts — Invesco Solar ETF (TAN) Performance (as of January 3, 2026)
Consumer Protection Forum — Sonneninvest Deutschland GmbH & Co. KG Insolvency (September 24, 2024, Erfurt Local Court)
BaFin — Disclosure pursuant to Section 11a of the German Investment Act (VermAnlG) regarding te Solar Sprint IV (May 12, 2022)
EUR-Lex — EU Regulation 2024/1747 (Mandatory CfDs as of July 17, 2027)
Laws on the Internet — Sections 7, 7g, and 3(72) of the Income Tax Act (EStG); Sections 1, 17, and 19 of the Commercial Code (HGB); Section 25 of the Renewable Energy Act (EEG) 2023
Helm Group — Portfolio Data 2024 (company’s own figures, transparently cited in the article)
