How we value renewable energy companies
First: which type is it?
"Renewable energy" covers two business models with almost nothing in common:
| Type | What the company owns | Valuation |
|---|---|---|
| Developer / operator | Assets and power purchase agreements | Project DCF, EV/MW |
| Technology supplier | Product, patents, order book | as Technology |
Every analysis starts with this classification. Valuing an electrolyser manufacturer with a project DCF would be as wrong as valuing a wind farm operator on EV/Revenue.
Developers: DCF at project level
The big difference from resources or biotech: the revenue is contracted. A power purchase agreement (PPA) fixes volume and price for 10 to 20 years — and what matters about it is term, price formula and indexation, offtaker credit quality, and volume and curtailment risk. "There is a PPA" says nothing without those four.
That materially lowers risk — and with it the discount rate:
| Situation | Discount rate |
|---|---|
| Operating asset with long-term PPA | 6 – 8% |
| Consented project under construction | 8 – 10% |
| Project in development | 12 – 15% |
| Early pipeline without consent | not valued, only disclosed |
These ranges are our convention, not a standard — no accounting rule and no regulator prescribes them. They express the order of the risks, not a measured market rate. We state the rate used in every analysis so that it can be recalculated.
We model per project, not at group level: capacity, load hours, PPA price and term, operating costs, capital requirement, financing structure and residual value after contract expiry. Then the sum of projects, less corporate costs, less net debt.
Weighting the pipeline by maturity
Developers like to communicate a large project pipeline in gigawatts. That figure is worthless as a valuation basis until it is broken down by maturity:
| Stage | Weighting |
|---|---|
| Operating | 100% |
| Under construction, financed | 90% |
| Consented, PPA signed | 70% |
| Consented, no PPA | 40% |
| In permitting | 15% |
| Early development | 0% — disclosed, not valued |
These weightings, too, are our convention and not a market norm. They are published so that it is clear which part of a pipeline gigawatt enters our calculation at all.
EV/MW and LCOE
EV/MW — enterprise value per megawatt of installed or secured capacity. A pure comparison metric against the peer group, never a standalone measure: it ignores load hours, PPA price and remaining term, which is to say practically all of the earnings quality. A solar park in Andalusia and one in Schleswig-Holstein have very different output at identical capacity. And MW is not MWh: across technologies and locations the multiple is only readable with load hours in mind.
How value per megawatt steps up through the maturity stages
A megawatt in an early project idea and a megawatt on the grid are not the same good. What changes between the stages is not the electricity but the probability that there will ever be any — and who carries which risk until then:
| Stage | How to recognise it | What changes in the value |
|---|---|---|
| Early development | Site secured, nothing else | Pure option value. A substantial share of these projects is never built |
| Advanced | Permitting under way, grid connection applied for | The probability of realisation rises; the timing stays open |
| Ready to build | Consented, grid connection granted, financed, PPA signed | The big step up: an option becomes a bankable cash flow |
| Under construction | Final investment decision taken | Permitting risk gives way to construction and schedule risk |
| On the grid | Generating and selling | Full present value; the remaining risks are price, weather and availability |
The two points at which value steps up sharply are consent and grid connection. Both are decisions of authorities or grid operators, not of the company.
Why no euro amounts per megawatt appear here
Market reports circulate ranges per megawatt and maturity stage. We do not reproduce them. Such figures depend on the market, the technology, grid charges, the support regime and the interest rate level of a given date; an order of magnitude from one country and one year does not transfer to another, and few of the numbers in circulation say what they rest on. We have no verifiable primary source for them — and without one we do not publish the figure. A number without a source and a date is not qualified here; it is left out.
What carries the argument is not the amount anyway, but the sequence: where in a project's life the value jumps, and why. A specific EV/MW figure belongs in the analysis of a specific company — with its peer group, its reporting date and the maturity breakdown it came from.
LCOE (levelised cost of energy) — measures competitiveness. What matters is not the absolute figure but whether it sits below the achievable market price once subsidies expire.
The hydrogen and storage exception
Most small caps in this space have no meaningful revenue. The same applies as in deeptech: there is nothing to multiply and nothing to discount.
In those cases we disclose technology readiness, order book and reference projects, cash runway and expected dilution — and state explicitly that no defensible valuation is possible. That is a more honest statement than a DCF on revenue assumed for 2032.
What this method cannot do
- Interest rate sensitivity. These business models are extremely capital-intensive and debt-financed. A two-percentage-point rise in the cost of capital can halve equity value with no operational change whatsoever. We always show this as a sensitivity.
- Regulatory dependence. A large share of earnings rests on support regimes that are set politically and can change.
- Grid connection. The most underestimated risk in Germany and Spain: a consented project without a connection agreement is not a project.
- Post-PPA power price. Residual value rests on a market price fifteen years out. That is the weakest assumption in the entire model, and it belongs in the sensitivity table.
What we do not do
We do not value pipeline gigawatts without a maturity breakdown. We do not assume a PPA renewal at today's terms. We do not adopt a per-megawatt comparison figure for which we lack the primary source. And we do not run a DCF on hydrogen revenue that nobody has yet earned.
Sources
- The four contract elements of a PPA — term, price formula and indexation, offtaker credit quality, volume and curtailment risk — are standard components of such agreements. In any individual case what governs is the company's own disclosure: annual report, project documentation or ad-hoc release, each cited with its date.
- The discount rates and maturity weightings on this page are our own convention. They rest on no standard and are disclosed in every analysis.
- Deliberately absent: ranges of enterprise value per megawatt by maturity stage. We have no verifiable primary source for them.
What changed in version 2
11 August 2026. We checked the figures on this page against the primary sources. Here the finding is less a wrong number than a missing source.
- No euro amounts per megawatt by maturity stage are stated any more. Such ranges circulate in market reports but could not be traced to any verifiable primary source. They were removed from our PPA and EV/MW metric page on the same day for the same reason. In their place stands the relative sequence: pure option value, rising probability of realisation, the big step up at ready-to-build, then construction and schedule risk, and finally full present value. The magnitudes themselves depend on the market, the technology, grid charges, the support regime and the interest rate level — without a defensible source we do not publish them.
- Discount rates and maturity weightings are now marked as a convention, not as a market norm. They always were one; it simply did not say so.
- New: a list of sources.
No published valuation is affected. aktienanalyse.online operates in "start without an analyst" mode: we publish neither a fair value nor price targets. Not a single valuation was issued under version 1 of this page that relied on the removed figures.
Version 2 · 11 August 2026