Photovoltaics in Portfolio Planning: How Does a Financial Advisor Classify PV Systems?
A financial advisor classifies solar power as a tangible infrastructure asset: What allocation is realistic, what remains after taxes, and what the four real risks are. A guest column by Marco Berardi (Autark 360 GmbH, Mannheim), with 25 years of experience in financial advising.
The short answer
In portfolio planning, a solar power system falls into the category of infrastructure assets. It provides predictable cash flows, real net asset value, and a low correlation with stocks and bonds. As an allocation of about 10–15% of a portfolio starting at approximately €500,000, it can serve as a useful diversification—provided that the tax situation, investment horizon, and liquidity reserve are appropriate.
This article on photovoltaic portfolio planning is intended for high-net-worth individuals, entrepreneurs, and family offices who wish to consider photovoltaics as a component of their wealth architecture. It explains how a direct investment in PV affects a portfolio, what returns are realistic after accounting for costs, taxes, and risks, and when such an investment is not a good fit. The article “Photovoltaics as an Investment” explains how photovoltaics generally fit into the investment landscape.
How Photovoltaics Fit Into an Investment Portfolio
In my 25 years as a financial advisor, I’ve seen many investment trends come and go. Solar power is one of the few areas where I can say with confidence today: it’s a sound investment—with clear limitations. What matters most isn’t the highest nominal return, but the combination of tangible assets, predictable income, and tax benefits.
What Portfolio Planning Specifically Means for a Photovoltaic System
Portfolio planning for photovoltaics means structuring a PV system not as a standalone asset, but as a building block of the overall asset architecture. This encompasses site selection, system size, tax planning, and risk management over the entire 20- to 30-year lifespan. The goal is to achieve a stable, inflation-protected return with controlled risk—not the fastest tax-saving strategy.
Effective portfolio planning for photovoltaic systems involves the structured analysis and management of multiple systems. This ranges from site quality to procurement and permitting processes, all the way through to operation and maintenance. Site quality is critical to success, and diversification across multiple systems and regions reduces yield and operational risks.
Correlation with Other Asset Classes
Institutional investors such as Union Investment, KKR, and J.P. Morgan Private Bank classify solar and photovoltaics as infrastructure within the alternative investments category. A direct PV investment—physical ownership of an actual plant, not a fund share—is largely unaffected by stock market cycles. This is precisely where the diversification benefit lies.
| Comparison with | Correlation (PV direct) | Significance for the Portfolio |
|---|---|---|
| Stocks (MSCI World) | low | Largely independent of stock market fluctuations |
| Federal bonds | close to zero | Little Correlation with Interest Rate Movements |
| Inflation | slightly positive | Partial Protection Against Inflation Through Real Income Generation |
| Renewable Energy ETFs | high | Behave like technology stocks — offer little diversification |
| Guidance figures based on IEA/Imperial College London, “Clean Energy Investing” (2021). These are estimates, not guaranteed figures. | ||
The bottom line: If you buy a renewable energy ETF instead of making a direct investment, you’ll gain little in the way of diversification—you’re essentially buying yet another technology fund. A direct investment, on the other hand, does not fluctuate with the DAX. The article “Direct Investment in Photovoltaics: What You Need to Know” explains how a direct investment differs from a fund.
What Allocation Is Realistic in PV Portfolio Planning?
This ensures sufficient liquidity to maintain flexibility. Diversification into tangible assets with a real return base is becoming increasingly important in an environment of fluctuating interest rates; at the same time, the energy transition is creating structural tailwinds for solar energy as a long-term technology. One aspect of growing importance in ESG-oriented portfolios: Renewable energies are projected to prevent approximately 265 million metric tons of CO2 equivalents in Germany by 2025, with photovoltaics serving as a key pillar. The article “Photovoltaics as an Investment” shows how photovoltaics compares to ETFs, real estate, and money market accounts.
Typical PV/Infrastructure Allocation in the Portfolio
Portfolio size at which PV becomes a sensible addition
Annual Return Before Taxes (Commercial/Industrial)
Recommended investment horizon with no liquidity needs
Renewable Energy as a Portfolio Component: From Assessment to Operation
A solar investment is only as good as its execution. A partner that handles site acquisition, construction, operation, and marketing all under one roof reduces the risks associated with coordination. The key steps:
- Site Qualification: Data-driven screening is crucial. The site assessment includes the size, orientation, slope, and shading of the roofs, as well as structural suitability—high-quality substructures ensure stability in wind and snow.
- Planning and Procurement: Effective implementation requires a roadmap with a budget and timeline, coordination with the network operator, the permitting process, and the right technology. Professional project management prevents delays and cost overruns.
- Operation and Maintenance: Monitoring after commissioning ensures energy output and availability. Cloud-based platforms enable real-time monitoring of performance data and output; a clear maintenance schedule keeps the system operating at peak efficiency throughout its entire service life.
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The Risk-Return Profile: What's Left After Costs and Taxes
I distinguish between three segments that differ fundamentally.
Small-scale systems on owner-occupied homes (up to 30 kWp). Return on investment without storage is approximately 3.5–5% per year. While the tax exemption under Section 3, No. 72 of the Income Tax Act (EStG) improves the net return, it excludes the investment deduction (IAB). As a pure financial investment, this segment is unattractive; however, it can make sense as a way to reduce electricity costs for owner-occupied homes. Without storage, the self-consumption rate is typically 25–35%; with storage, it can reach up to about 70%.
Commercial rooftop systems (30–500 kWp). Return on investment of approximately 6–10%, driven by high self-consumption. Depending on the operation, the savings on electricity costs range from about 16 ct/kWh (industry, medium voltage; BDEW 04/2026) to over 32 ct/kWh (smaller commercial businesses under 20 MWh/year; Destatis, second half of 2025)—significantly higher than the feed-in tariff.
Industrial and logistics facilities (100 kWp–5 MWp). The strongest investor segment: high self-consumption, low specific system costs, available roof space, and streamlined permitting. With integrated storage, the self-consumption rate increases from 40–60% to an estimated 80–90%, and the system generates additional revenue by avoiding negative feed-in periods and through arbitrage.
When making an investment decision, the economic feasibility analysis is key: Key metrics such as the payback period and self-consumption rate indicate whether a system is viable. The size of the system should be based on the facility’s annual electricity consumption—selecting the appropriate capacity improves economic efficiency. Self-consumption can be specifically increased through storage solutions and energy management systems.
What the 2025/2026 Market Data Reveals
The current figures are more honest than many sales brochures:
- EEG Feed-in Tariff for commercial rooftop systems (40–100 kWp): approximately 5.44 ct/kWh for partial feed-in (BNetzA, effective August 1, 2026, with a 1% semi-annual reduction). Overview of current rates: Feed-in Tariff 2026.
- Annual market price for solar power in 2025: 4.508 ct/kWh (netztransparenz.de/ÜNB) — with significant seasonal fluctuations; in the summer of 2025, the monthly price occasionally fell below 2 ct/kWh (low in June: 1.84 ct/kWh).
- Negative-price hours in 2025: 573 hours without compensation (BNetzA; a record high compared to 457 hours in 2024). The Solar Peak Act of February 25, 2025, reduced the buffer for new installations from three hours to zero.
- System costs for commercial rooftop solar installations: approximately 800–1,200 €/kWp on a turnkey basis without storage, depending on size and configuration (Fraunhofer ISE / Market Data 2026); costs are correspondingly higher when storage is included.
Returns don't just happen on their own. They require professional structuring, the use of storage as an active component for generating returns, and realistic cash flow planning.
Return on Investment Comparison: Solar Power vs. Other Investment Options
| Type of investment | Annual return | Liquidity | Distinctive feature |
|---|---|---|---|
| Call Money (Top Rates) | up to ~3.4% | immediately | Often a promotional interest rate; offers little real protection against inflation |
| 1-Year Time Deposit (Top) | up to ~3.25% | bound | not a real asset |
| 10-year U.S. Treasury bond | ~2.7–2.9% | tradable | not a real asset |
| MSCI World ETF (long-term) | ~7–10% | immediately | high volatility |
| Real Estate (Gross Rental Yield) | ~3.0–4.1% | very low | Concentration risk |
| Direct Investment in Solar Power (Commercial) | ~6–10% before taxes | short (20 years) | A true store of value, protection against inflation |
| Interest rates as of July 2026 (ECB deposit rate: 2.25%; overnight deposits/time deposits: best rates from comparison websites, some of which are promotional rates; German government bonds: German Federal Finance Agency). Daily rates are subject to change. | |||
Germany or Italy? A Sober Comparison of the Two Locations
Southern Italy achieves approximately 1,600–1,800 kWh/kWp per year, compared to about 1,000–1,200 kWh/kWp in southern Germany (based on PVGIS data). The main advantages of the location are therefore the yield and the subsidy structure.
FER-X: What Will Actually Apply in 2026
The Italian subsidy system is in a transitional phase. The previous FER X Transitorio (MASE Decree of December 30, 2024, in effect since February 28, 2025, budget of €9.7 billion, quota of 23.65 GW) guaranteed a tariff of €77/MWh over 20 years for solar installations up to 1 MW under the direct access program. This window has been closed for new applications since December 31, 2025.
The successor program, FER X Definitivo (signed by MASE on June 18, 2026, with a volume of €23 billion, 37.15 GW, and a term through 2030), had not yet entered into force as of the end of July 2026—its publication in the Gazzetta Ufficiale was still pending. This means there is currently a regulatory gap for new projects. Anyone planning projects in Italy needs to be aware of this timeline.
Regulatory Risk in Italy
I would not be an honest advisor if I failed to mention this: The 2014 “Spalma-Incentivi” cut (Law 116/2014) retroactively reduced feed-in tariffs that had already been approved by 17–25%. The Italian Constitutional Court upheld the measure (Ruling No. 16/2017). Several international ICSID arbitration proceedings followed—with mixed results for the investors.
That is no reason to avoid Italy, but it is a reason to have the contractual structure and local legal risks professionally reviewed. From a tax perspective, an investment in Italy constitutes a permanent establishment with primary tax liability there (IRES at 24% plus IRAP at approximately 3.9%, totaling about 27.9%). The Germany–Italy Double Taxation Agreement (signed October 18, 1989; in force since December 27, 1992) governs tax credits. PV-Investment Italy 2026 provides an in-depth overview.
Tax Optimization: The Lever That Shapes Net Returns
Declining-balance depreciation is three times the straight-line depreciation, capped at 30%; for a solar power system with a useful life of 20 years, this amounts to 15% per year (Section 7(2) of the Income Tax Act [EStG], applicable to purchases from July 1, 2025, through December 31, 2027, under the 2025 Immediate Investment Program). Combined, up to approximately 77.5% of the investment is tax-deductible if purchased in January—though this is accumulated over two years (the IAB deduction from the previous year plus the special and declining-balance depreciation in the year of investment), not in the first year alone. If the asset is put into service later in the year, the tax deduction is proportionally lower because the declining-balance depreciation is reduced on a month-by-month basis. At a top tax rate of 45%, the effect over the two years amounts to approximately one-third of the investment amount (about 35%).
The IAB is claimed in the year prior to the investment and reduces profits in advance (profit threshold of €200,000, Section 7g(1) of the German Income Tax Act (EStG)). GmbH owners can also take advantage of the IAB, though without the trade tax exemption. A holding structure allows for largely tax-free profit distribution and retention of approximately 30% rather than at the personal top tax rate, pursuant to § 8b of the Corporate Income Tax Act (KStG). The “How the Logic Energy Investor Model Works” section explains how this is structured.
The Four Risks That Get Overlooked During the Sales Pitch
Risk 1: Illiquidity
Direct investments in solar power tie up capital for 15 to 20 years. A secondary market does exist, but exits are illiquid and typically involve discounts. My rule of thumb: Invest only capital that you won’t need for 15–20 years—plus a separate, liquid emergency reserve equivalent to 6 to 12 months’ income.
Risk 2: Regulatory Intervention
The Solar Peak Act (February 25, 2025) tightened the rules: New installations will no longer receive compensation once spot prices turn negative, starting from the first quarter-hour. The 2027 EEG reform has even far-reaching implications: On July 29, 2026, the Federal Cabinet approved the draft—which includes mandatory direct marketing, a uniform feed-in tariff, and a two-sided CfD mechanism for larger plants that captures excess profits. Debate in the Bundestag will begin in September 2026. “CfD Mandate 2027 for PV Investors” analyzes the details.
BSW-Solar President Jörg Ebel warned that if the original plans were implemented, 60% of potential investors would no longer install rooftop systems. Those who invest today are operating within the current regulatory framework; those who wait will face a more uncertain one.
Risk 3: Market Price Risk
The 573 negative hours in 2025 are not an outlier, but a trend: The consulting firm E-Bridge expects Germany to see over 700 negative hours per year by 2030. During such hours, a system without storage generates no revenue—and, since the Solar Peak Act took effect, has effectively been operating at a loss. A battery storage system is therefore not an add-on for commercial rooftop systems, but rather part of the business model: protection against negative prices, optimization of self-consumption, and arbitrage all in one.
Another lever is portfolio marketing: By bundling multiple rooftop systems into a virtual power plant, the direct marketing threshold of 100 kWp can be exceeded. Providers cite additional revenues in the range of 5–15% compared to feeding electricity into the grid solely under the EEG; however, there are no reliable independent studies on this, which is why this should be understood as market practice rather than a guaranteed figure. Large ground-mounted solar farms are increasingly marketing their electricity through long-term power purchase agreements (PPAs) on the spot market rather than through the fixed EEG feed-in tariff.
Risk 4: Operator Risk
Bankruptcies in the sector—such as Sun Contracting (approximately €47 million in liabilities, affecting over 1,000 crowd investors), MEC Energy, and Fellensiek Projektmanagement—show that the risk often lies not in the investment itself, but in the quality of the operator. My minimum requirements for a partner:
- Proven project references with verifiable yield data
- Financing secured before construction begins (no risk of follow-on financing)
- Operator's personal liability — not a mere shell company
- Transparent Monitoring with Investor Access
- All-risk insurance, technical warranty, and a clear maintenance schedule
Who Can Benefit from Including Solar Power in Their Portfolio—and Who Can't
- Taxable income in the top tax bracket (42% and above)
- Total portfolio starting at approximately €500,000, with PV as a 10–15% allocation
- Investment horizon of 15–20 years, with no need for liquidity from this capital
- A liquid emergency fund equivalent to at least 6 months' income
- No existing concentration risk with respect to tangible assets
- Marginal tax rate below 42% (the tax lever has little effect)
- Capital will be needed within ten years
- The minimum investment requirement leads to an excessive concentration of capital
- Insufficient liquidity reserve
- A decision based purely on tax considerations, without a substantive review
Conclusion: Solar power, yes—but with conditions
Direct investments in photovoltaics are neither the risk-free 8% return advertised in the prospectus nor a speculative investment. They are a long-term infrastructure asset with genuine diversification benefits, predictable cash flow, and—in the right tax situation—significant return leverage through legal depreciation instruments. This creates a window of opportunity in 2026: The 15% declining balance depreciation applies only to purchases made by December 31, 2027; the subsidy landscape will change with the 2027 EEG reform; and the risk of negative electricity prices makes storage a must-have solution.
For those ready to take the next step: Explore investment opportunities with Logic Energy. The article “Direct Investment in Photovoltaics: What You Need to Know” explains how a direct investment differs from a fund. If you’re an entrepreneur looking for a system for your own business rather than as an investment, there’s another option worth considering: A Custom PV System for Your Business.
Is a direct investment in solar power right for your situation?
From the initial return on investment calculation to the final annual statement—with fixed financing, long-term management, and a personal point of contact.
Frequently Asked Questions (FAQ)
What percentage of a portfolio should a solar power system account for?
As a general guideline, 10–15% of a portfolio starting at around €500,000. For family offices with assets of €1 million or more, 15–20% is reasonable, as long as the total allocation to illiquid assets, including real estate and private equity, does not exceed 40%. Private equity is a complementary investment, not a primary investment.
At what marginal tax rate does a solar investment become tax-efficient?
The IAB tax incentive, special depreciation, and declining-balance depreciation only have a noticeable impact once the marginal tax rate reaches about 42%. Below that threshold, the effect is minimal, and the investment must be economically viable on its own. Tax benefits should never be the primary factor in decision-making.
What is the difference between a direct investment in solar power and a solar fund?
With a direct investment, you physically own a real asset and receive its returns directly. A fund pools many investors into a single vehicle and often behaves like a technology fund in terms of returns. A direct investment offers lower correlation with the capital market.
How secure is the feed-in tariff for new PV systems?
Existing feed-in tariff commitments remain in effect, but the 2027 EEG Reform (Cabinet draft dated July 29, 2026) fundamentally changes the support structure for new installations: a requirement for direct marketing and a CfD cap for larger installations. The feed-in tariff is therefore no longer a static value.
Is solar power in Italy a good investment for German investors?
Italy’s advantage lies in the approximately 40–60% higher yield in southern Italy, not in higher electricity prices. The FER-X subsidy system will be in a transitional phase in 2026: the old “Transitorio” window has closed, and its successor has not yet taken effect. Regulatory risk and tax liability for operating facilities must be assessed in advance.
What risks do salespeople rarely mention on their own?
Four: Illiquidity with capital tied up for 15–20 years, regulatory interventions such as the Solar Peak Act and the 2027 EEG reform, market price risk due to negative electricity prices, and operator risk. The latter is illustrated by sector-wide bankruptcies such as that of Sun Contracting, which affected more than 1,000 crowd investors.
When should you definitely avoid investing in solar power?
If the marginal tax rate is below 42%, the capital will be needed within ten years, there are no liquid reserves, or the decision is made purely for tax reasons without an assessment of economic substance. In these cases, illiquidity and risk outweigh the potential benefits.
About the Author: Marco Berardi
Marco Berardi is the managing director of Autark 360 GmbH in Mannheim, an independent wealth management firm focused on asset-based wealth accumulation for entrepreneurs and high-net-worth individuals. With 25 years of experience, he develops wealth management strategies that combine traditional portfolio planning with the targeted use of energy-related assets—such as solar power, battery storage, and renewable energy sources.
References
- Federal Network Agency — EEG Feed-in Tariffs for Photovoltaics (Decrease Effective August 1, 2026)
- Federal Network Agency — Data on the Electricity Market in 2025 (573 hours of negative prices)
- netztransparenz.de (TSO) — Solar Market Values 2025
- Federal Law Gazette — Solar Peak Act (BGBl. 2025 I No. 51)
- pv magazine — Cabinet Approves EEG 2027 (July 29, 2026)
- BDEW — Electricity Price Analysis, April 2026 (Industrial Electricity Price)
- Destatis — Electricity Prices for Non-Residential Customers, Second Half of 2025 (Press Release 111/2026)
- Fraunhofer ISE — Current Facts About Photovoltaics in Germany (May 5, 2026)
- § 7 EStG — Declining-Balance Depreciation
- § 7g of the Income Tax Act (EStG) — IAB and Special Depreciation
- § 3 No. 72 of the Income Tax Act (EStG) — Tax Exemption for Systems Up to 30 kWp
- MASE — FER X Definitive, 37.15 GW (June 18, 2026)
- Terna / Italia Solare — Italian PV Capacity at the End of 2025
- GTAI — Italy: Tax Law (IRES/IRAP)
- IEA / Imperial College London — Clean Energy Investing (2021)
- Helm Group — Portfolio Return Data for 2024 (internal project data)
Related Articles: Solar Power as an Investment · Tangible Assets as a Hedge Against Inflation
