Most German institutions have avoided renewable energy investments, but greater commitments from politicians could help motivate asset allocators, according to research.
Just over half of German institutions surveyed by Chorus Clean Energy are still not investing in the asset class. Of those, 13% said they were planning to invest the future.
The main obstacles mentioned by the investors, with just under €770bn in assets under management in total, were regulation and lack of political commitment to the topic.
Almost 80% noted a relaxation of the regulatory and supervisory framework would facilitate investments in renewable energy (it should be noted that the survey was conducted prior the publication of last year’s amended investment regulations for insurers and certain pension funds, wich clarify regulations for investments in direct lending, private equity and infrastructure).
Another major hurdle to investing in renewable energy is a lack of a clear commitment from the German government to move to renewable energy from fossil fuels, mentioned by 61%.
Germany is aiming to generate 80% of the total electricity demand from renewable sources by 2050 and has passed a law including subsidies for energy from those sources. But these subsidies are only guaranteed to 2016 and over half of the surveyed investors would like to see an extension.
A similar number said funding for storage technology for excess energy would be useful and might change their minds on investing.
Of the 43% already invested in renewable energy, two-thirds want to increase their exposure.
Nearly half (48%) are invested via funds, 28% via direct investments, 18% via funds of funds, and the rest via private equity.
The vast majority (78%) use equity vehicles, with debt instruments only making up 10% of the exposure and the rest mixed-finance products.
Over 80% are invested in Germany. Almost as many said they were also invested in other European projects and only 22% outside the continent.
The majority (77%) of investors mentioned the planning reliability of returns from these investments as main reason for their commitment.