How can you invest money in wind power? The most important forms of investment
Direct Investment and Closed Fund: The concentrated investment
With a direct investment, investors become co-owners of a specific wind power plant. It is common to participate as a limited partner in a limited partnership that bundles the capital of many investors. If the amount required for the project is combined, the fund is closed, hence the name Closed Funds.
The incentive lies in direct ownership, including the right to have a say, profit sharing and tax benefits from the corporate participation. The chance of a return on investment is high if the project goes live. However, this is precisely where the risk lies, up to the total loss of the invested amount.
The capital is concentrated on one or few investments. This means that a weak wind year or a technical failure may affect the entire investment. Making things more difficult is the long-term commitment, often ten years and more. Anyone who commits themselves for so long bets that a first-class plant and location today will still be competitive in ten or fifteen years. The minimum investment is usually in the five-digit range.
Crowdinvesting: Small amounts, increased risk
In crowdinvesting, a large number of investors pool small amounts for a single wind power project. Legally, this is typically done via a subordinated loan: Investors do not become co-owners, but lend money to the operator for a fixed interest rate. The entry level is low, often from just 100 euros, and the term is manageable.
The tick in the word is secondary. If the operator goes bankrupt, all other creditors are served first, the crowd comes last. In the worst case, this means the complete loss of the capital invested.
Overall, crowdinvesting platforms are currently strugglingto offer high-quality projects at all. The most profitable sites have long been built, new land remains scarce and politically competitive. Convincing projects usually find financially viable donors long before they even reach the crowd for tendering.
Equity and thematic funds: Wind power on the stock exchange
Wind power equities and thematic funds do not focus on a wind farm, but on the companies behindit that build turbines or operate plants. The return then depends on the share price and the dividend. It therefore follows the laws of the stock exchange like any other security.
This means that the investment can be bought and sold at any time, and the amounts are also more flexible. Thematic funds or ETFs also offer broad diversification. However, the price dances according to the mood on the stock market and the interest rate level, with which the investment plays with what makes wind power so valuable as a tangible asset: their independence from the stock market with stable, predictable cash flows.
The impact, which is quite important to some investors, is also exploding. The capital does not build a new investment, it merely changes ownership on the stock exchange. Behind the green label of many indices are also utilities that have only switched a small part of their business to clean energy.
Open-end funds and ELTIFs: The broadly spread tangible asset
An open-end fund bundles the capital of many investors and distributes it across an entire portfolio. Shares can also be resold subject to certain minimum holding periods and redemption periods. This combines breadth and flexibility, which is exactly what closed-end funds lack. However, this structure did not exist for wind power and renewable energies for a long time, and direct access remained reserved for institutional investors.
The ELTIF (European Long-Term Investment Fund) closes this gap. It allows capital from private investors to flow into real assets that continuously produce electricity and discharge cash flows. ELTIFs also allow wind power to be combined with other assets such as solar, storage and electricity grids in one fund.
In terms of liquidity, it moves between rigid closed constructs and the equity market: Shares can be redeemed before maturity, but not on a trading day, but usually on fixed dates. Since the ELTIF 2.0 reform, the previous minimum investment of EUR 10,000 has also been discontinued.
ELTIFs are not limited to wind power or renewable energy. An ELTIF may also invest in private debt (corporate loans) or other assets. Before making a purchase, it is therefore worth taking a close look at who is behind the fund, what gives it its track record - and especially what it actually invests the capital in.
