Why the next 18 months could redefine renewable energy valuations in Europe
(Investor outlook • 2025–2026 • PhoenixRevoco perspective)
Europe’s energy transition is entering a decisive stretch. Policy acceleration, capital rotation, and new uses for legacy infrastructure are converging to reshape how renewables are valued. For investors and founders alike, the next 18 months may mark a structural re-rating.
From Dormant to Darling: A Revival Mindset
Picture a promising solar platform that stalled in 2023 amid grid queues and higher rates. Today, with permitting reforms biting and fresh capital returning, the same asset looks primed for expansion. That’s the essence of rebirth—the narrative at the core of PhoenixRevoco’s identity. Our role is to pair seasoned judgment with bold execution, helping high‑potential assets recover their spark. If you’re new to us, start with who we are and how we approach solutions across sectors.
Where the Market Stands Right Now
Across the European Union, clean energy investment in 2025 is set to approach USD 390 billion, underpinned by falling technology costs and the post‑crisis policy push. Electricity generation data shows the shift is well underway: renewables supplied roughly 47% of EU power in 2024, with multiple analyses noting solar overtook coal for the first time and wind continued to outproduce gas.
Why it matters for valuations: Rising clean energy shares, deeper electrification, and lower capital costs historically correlate with tighter spreads on project finance and higher platform multiples—especially when policy visibility improves.
Three Forces That Could Reprice Renewables
1) Policy Momentum: From Targets to Timelines
EU policy has moved from ambition to execution. The updated Renewable Energy Directive raises the 2030 target to 42.5% (with a 45% aspiration). Meanwhile, the Solar Rooftop initiative under REPowerEU phases in obligations: solar on new public and commercial buildings by 2026, existing public and commercial by 2027, and new residential by 2029—as tracked by the European Parliament’s legislative file here.
On the industrial side, the Commission’s emerging Clean Industrial Deal framework proposes mobilising around €100 billion for EU‑made clean manufacturing, complementing permitting and state‑aid flexibilities. The direction of travel is clear: more electrification, faster build‑out, and a stronger home‑grown supply chain.
2) Capital Rotation: M&A and Platform Building
After a choppy 2023, deal‑making has re‑accelerated where policy clarity and grid access exist. A timely example: U.S. investor Sixth Street acquired 38% of Italy’s Sorgenia in an approximately €4 billion transaction, alongside a consolidation of wind and solar assets into the platform to fund a 5 GW development pipeline—see reporting here and the company release here. Beyond Italy, Germany approved roughly 14 GW of onshore wind capacity in 2024—an approvals surge that typically precedes stronger installation and M&A cycles—see Reuters and Clean Energy Wire.
3) Technology & Infrastructure: New Uses, New Economics
AI‑driven demand for reliable, low‑carbon power is catalysing a wave of conversions of legacy power sites into high‑tech “energy parks” and data hubs—leveraging existing interconnections while co‑locating new renewables. The trend is visible across Europe and was spotlighted by recent reporting. For investors, integrated models—generation + flexible load + storage—can unlock diversified returns and higher platform valuations.
What This Means for Multiples
When targets convert into permits and permits convert into megawatts, risk discounts compress. In the near term, we expect a bifurcation: assets with grid visibility, bankable PPAs and proven OEMs will command a premium; assets facing interconnection uncertainty or permitting risk will trade at discounts. The gap is widening as data‑center demand intensifies and supply chains localise.
Short Story: A Platform-Level Rebirth
Consider a mid‑sized Southern European platform that anchored on gas‑peaking assets in the 2010s. With the rise of renewables‑plus‑storage, and corporate buyers seeking 24/7 carbon‑free energy, the company is repositioning legacy sites as flexible nodes tied to new solar and wind. Policy improves the permitting cadence; PPAs stabilise cash flows; M&A brings critical mass. The end result: multiple expansion without chasing speculative megaprojects.
2025–2026 Outlook: Where We See the Biggest Re‑rating Potential
Utility‑Scale Solar PV
With hardware costs structurally lower and rooftop mandates accelerating distributed generation, solar is poised for another record year—Europe’s Q1’25 production jumped over 30% year‑on‑year. Expect platforms that combine utility‑scale build‑outs with C&I and rooftop portfolios to gain a valuation edge, especially where curtailment can be mitigated with storage.
Onshore & Offshore Wind
Germany’s approvals surge suggests a pipeline rebound even as weather variability keeps near‑term generation noisy. For onshore wind, developers with land banks near reinforced grid nodes should see repricing. Offshore’s capital intensity keeps the field narrower, but contract structures are improving as governments recalibrate auctions and indexation.
Storage & Green Hydrogen
Storage is moving from optional to essential in high‑solar regions, with merchant revenue stacking (arbitrage + balancing + capacity) maturing quickly. On the industrial side, green hydrogen’s trajectory hinges on electrolyser costs and offtake frameworks; the Clean Industrial Deal’s domestic manufacturing push could de‑risk segments of the value chain.
Risks to Monitor (and How We Mitigate Them)
Interconnection Delays: Queue reforms are progressing but uneven. We prioritise assets with grid‑adjacent footprints or upgrade commitments.
Rate Volatility: Rising rates dented multiples in 2023; with stabilisation, we structure step‑down financing and CPI‑linked PPAs to defend equity IRRs.
Permitting Complexity: The EU has scoped “overriding public interest” for renewables and shorter timelines, but local processes still vary. Our diligence weights permitting track record as a core risk factor.
Supply‑Chain Localisation: Rules favour EU‑made inputs; we underwrite schedules and vendor diversity to avoid single‑point exposure.
Signals PhoenixRevoco Watches
Permitting velocity in Germany, Spain, Italy and the Nordics.
PPA spreads vs. wholesale benchmarks, especially for 24/7 clean power offerings.
Data‑center siting and utility partnerships at legacy plants (a leading indicator for co‑located renewables).
OEM orderbooks and health of turbine/solar manufacturers.
Our Lens: The Phoenix Way
As a firm born to steward revival, we look for companies and assets with strong bones but a specific constraint—capital structure, execution bandwidth, or market access. We invest when the constraint is solvable with our operating playbook and network. For a sense of our broader philosophy, see our recent market notes and explore our sector footprint. If you are evaluating a partnership, our contact page routes to the right team.
Key References (selected)
IEA, World Energy Investment 2025 — EU investment ~USD 390 bn: source
Eurostat, renewables share of EU electricity at ~47% in 2024: source
Ember, European Electricity Review 2025 (solar > coal; wind > gas): source
EUR‑Lex, Renewable Energy Directive (2023/2413): source
European Parliament, Solar Rooftop strategy timelines: source
Politico, Clean Industrial Deal ~€100 bn manufacturing support: source
Reuters, legacy plants converting to data hubs: source
Reuters, Sixth Street–Sorgenia deal (~€4 bn): source
Clean Energy Wire, Germany’s record year for onshore wind approvals (14 GW): source
This article reflects PhoenixRevoco’s forward‑looking views as of publication. It is not investment advice.
