Renewables: Price decline offers opportunities
Investors’ interest has faded above all in areas where the earnings outlook has deteriorated drastically. The main reasons for this were, on the one hand, sharply rising interest rates, which make financing often cost-intensive projects much more expensive. Secondly, the significant rise in prices for raw materials and supplies as well as higher labour costs meant that the original price and profit calculations for many renewable energy projects that had already been started or planned became invalid. After a long phase of very low interest rates and inflation, many providers were surprised by these developments.
In addition, higher capital market interest rates tend to result in lower equity valuations, especially for companies that will not make a profit in the foreseeable future. This affects companies in the hydrogen sector particularly strongly, as their profits are usually still a long way off. In the fund Raiffeisen-MegaTrends-ESG-Aktien, the fund management is currently hardly invested in hydrogen stocks.
The sharp fall in many equity prices in the renewable energy sector is naturally negative for investors who are already invested. At the same time, these price falls offer improved entry levels and earnings opportunities for those who wish to invest or buy more now.
Growth prospects, despite the challenges
The markets for wind and solar energy will continue to grow in 2025. Demand for renewable energies will continue to be driven by the increasing commitment to the energy transitionand the downward trend in the cost of wind and solar installations.
The global installed capacity of wind turbines is expected to increase by around 10% in 2025.
At the same time, the installed output of solar systems is forecast to increase by a good 30%.
In addition, the interest rate cuts expected this year could provide an additional boost to equities in the renewable energy sector, as this will have the opposite effect compared to 2022 to 2024. At least there should be no further headwind from the interest rate side in the near future.
Opportunities and risks
Where there are investment opportunities, there are naturally also risks. Technological innovations can change the market position of individual companies quite quickly, for better or for worse. Bottlenecks or supply chain problems with raw materials and components, unexpected cost increases or regulatory intervention are also latent risks or uncertainty factors. It is therefore necessary to monitor the market closely in order to be able to make timely adjustments to investments if necessary. Finally, the past two years have shown that even a clear growth sector such as renewable energy is naturally not immune to strong price fluctuations and price falls. However, this does not change the positive long-term outlook.
Funds investing in renewable energy
Raiffeisen-MegaTrends-ESG-Aktien
Raiffeisen-MegaTrends-ESG-Aktien is a global equity fund, which invests in the field of wind and solar power among other areas, for example in the following companies:
Vestas Wind is one of the market leaders in the field of wind power. The company has already installed more than 173 GW of wind turbines, helping to save several million tonnes of CO2 emissions every year. Vestas is also a leader in the development of new technologies for wind energy, such as offshore wind turbines with low emissions.
First Solar is currently the largest manufacturer of solar modules in the USA. The company mainly produces cadmium telluride (CdTe) thin-film products, which are primarily intended for use in large-scale solar installations. The company has recently further expanded its production capacity and plans to reach an annual capacity of over 10 gigawatts (GW) of solar modules manufactured in the USA by 2025.
Raiffeisen-SmartEnergy-ESG-Aktien
Renewable energies are a central part of the major future trend of "smart energy". In addition to wind and solar, this includes many other areas, e.g. technologies for storing, transporting and utilising energy more efficiently and cleanly, geothermal energy and much more.
For those who want to invest specifically in these high-growth areas we offer our Raiffeisen-SmartEnergy-ESG-Aktien, a specially designed equity fund that is also managed sustainably.
Find out more: Invest in smart-energy equities
Why renewables are so important
Renewable energies are crucial for the future energy mix in the gradual phase-out of fossil fuels. As demand continues to grow, wind and solar power have become driving forces in the megatrend renewable energy. Wind turbines and solar panels are already cornerstones of a cleaner, low-carbon energy future:
Wind power
Wind power remains an essential renewable energy source and has already reached a share of almost 10% of global electricity generation. In recent years, the market for wind turbines has experienced significant growth, with around 117 gigawatts (GW) of new capacity installed worldwide in 2024 alone. The leading positions in the global market for wind power are currently held by China, the European Union and the United States.Solar power
Besides wind power, solar power also plays a signifcant role in this environment. Last year, it contributed 6% to global electricity generation. The market for solar installations saw remarkable growth, with nearly 600 gigawatts of new solar capacity installed worldwide in the same year. The dominant players in the global solar markets are China, the United States, and India.
The funds Raiffeisen-MegaTrends-ESG-Aktien and Raiffeisen-SmartEnergy-ESG-Aktien exhibits elevated volatility, meaning that unit prices can move significantly higher or lower in short periods of time, and it is not possible to rule out loss of capital.