Renewable Energy Project M&A in Germany: Structuring and Due Diligence

The market and project stages

Germany's renewable expansion targets – at least 80% of gross electricity consumption from renewable sources by 2030 under § 1(2) EEG – drive a large and liquid market for project transactions. Developers sell projects to utilities, infrastructure funds, insurers and strategic investors; operators sell portfolios to refinance or rotate capital; and international investors enter the market through platform acquisitions. Renewable energy project M&A covers onshore and offshore wind, ground-mounted and rooftop solar, battery storage and increasingly hybrid projects.

Transactions occur at different stages, each with its own risk profile. Early-stage deals involve land rights and initial planning; at the ready-to-build stage, the project has its permit and often an EEG tender award or a power purchase agreement; operating assets have a track record of production and revenue. Purchase prices are often split into milestone payments linked to permits, tender awards, financial close or commissioning.

This article explains structuring, due diligence, regulatory approvals and key contract terms in renewable energy project transactions in Germany.

Development-stage transactions

Early-stage deals carry the highest risk and are often structured as development partnerships rather than outright sales. The buyer acquires the SPV or an option over it and pays the developer in instalments as the project progresses. The developer may remain responsible for obtaining the permit and grid connection under a development services agreement, with fees tied to milestones. These structures require careful drafting of the parties' obligations, cost allocation, decision-making and exit rights if the project fails, as well as clear rules on who owns project data and studies.

Structuring: share deal or asset deal

Most renewable energy project transactions are share deals: the buyer acquires the project company (SPV), usually a GmbH & Co. KG or GmbH, which holds the permits, land use agreements, grid connection commitments, EEG entitlements and contracts. A share deal avoids the need to transfer each asset and contract individually and to obtain consent from counterparties. It also preserves the EEG commissioning date and remuneration entitlements, which are tied to the installation.

Asset deals are used in specific cases, for example when a buyer wants only certain plants or wants to avoid historic liabilities. They require the transfer of permits (which are generally installation-related), assignment of contracts with counterparty consent, and new registrations in the market master data register.

Real estate transfer tax

Many SPVs do not own land but use it under lease agreements and easements. Where an SPV owns land, a share deal can trigger real estate transfer tax if at least 90% of the shares pass directly or indirectly to new shareholders within ten years (§ 1(2a), (2b) GrEStG). Structures with a remaining co-investor are common to manage this risk.

Due diligence on renewable energy projects

Due diligence in renewable energy project M&A focuses on whether the project can be built and operated as planned and whether its revenue is secure. Key areas include:

• Permits: immission control permits for wind turbines, building permits for solar, environmental conditions, deadlines for commencement and expiry, pending objections and court proceedings.
• Land rights: land use agreements with landowners, their term, rent, termination rights, written form compliance under § 550 BGB and registered easements securing the project and its lenders.
• Grid connection: connection commitments, capacity, costs and timing, and the status of the grid operator's reinforcement measures.
• Revenue: EEG tender awards and their deadlines, market premium entitlements, PPAs and route-to-market contracts.
• Contracts: turbine and module supply, EPC, operation and maintenance, and their warranties and availability guarantees.

For operating assets, technical due diligence on production data, availability and component condition is equally important. Our article on onshore wind permitting explains the permit framework.

Land use agreements

Long-term land use agreements are critical. Leases for more than one year that do not meet the statutory form requirements can be terminated early, which can endanger the project. Buyers should check written or text form compliance, the scope of use, rights for repowering, and the registration of easements in the land register to protect against changes of landowners.

Regulatory approvals

Larger transactions may require merger control clearance. German merger control applies where the parties' combined worldwide turnover exceeds EUR 500 million and one party has domestic turnover of more than EUR 50 million and another more than EUR 17.5 million (§ 35(1) GWB). Single project SPVs often have little turnover, but platform deals and acquisitions by large investors can trigger filing duties, including under the transaction value threshold.

Foreign direct investment screening can apply where a non-EU investor acquires a stake in a German company that operates critical infrastructure. Under § 55a(1) AWV, the screening can consider whether the target operates a critical installation within the meaning of the KRITIS framework. Large generation portfolios may reach the relevant thresholds. Our FDI filing checklist explains when filings are mandatory or advisable.

Battery storage and hybrid projects

Battery storage and hybrid projects combining solar, wind and storage add specific diligence topics: grid connection agreements for storage, which may include flexible or curtailable capacity; exemptions from network charges and their duration; revenue stacking across wholesale trading, balancing services and capacity mechanisms; and the creditworthiness of tolling or optimisation counterparties. Buyers should understand how changes in network charge rules may affect the business case after the transitional periods.

EU Foreign Subsidies Regulation

Large acquisitions by investors that receive financial contributions from non-EU states may also require notification under the EU Foreign Subsidies Regulation, independent of merger control.

EEG support, PPAs and revenue risk

Many German projects receive a market premium under the EEG, awarded in tenders by the Federal Network Agency. Tender awards come with deadlines for commissioning; missing them reduces or ends the entitlement and can trigger penalties. Buyers should check award dates, deadlines and any extensions. Under § 6 EEG, operators of onshore wind and ground-mounted solar plants may offer municipalities payments of up to 0.2 ct/kWh; whether such agreements exist and how they are structured matters for the business case.

Increasingly, projects combine EEG support with corporate PPAs or rely on PPAs alone. PPA terms – price, volume, duration, credit support, termination – are key value drivers. Changes in support schemes, such as the planned move to two-way contracts for difference under EU law, affect future projects. Our article on corporate PPAs discusses PPA terms in more detail.

Key terms of the purchase agreement

Share purchase agreements in renewable energy project transactions contain specific provisions. Purchase price mechanisms often combine a base price with milestone payments for permits, tender awards, financial close or commissioning, and with adjustments for actual capacity. Conditions precedent may include regulatory clearances, lender consents and the absence of challenges to permits. Locked-box or completion accounts mechanisms are used for operating assets.

Warranties typically cover permits, land rights, grid connection, contracts, compliance and taxes, with specific indemnities for known risks such as pending lawsuits against permits. Warranty and indemnity insurance is common in larger transactions. Development services agreements with the seller often accompany early-stage deals, setting out the seller's obligations to bring the project to the next milestone.

Seller perspective

Sellers can increase value and speed by preparing a vendor due diligence report, organising a data room with complete permit and land documentation, and resolving known issues before marketing the project. Clear documentation of land rights and grid connection status is particularly valuable. Sellers should also consider which warranties they can realistically give, especially for early-stage projects where many facts are still uncertain, and whether warranty and indemnity insurance can limit their residual liability.

Change-of-control clauses

Turbine supply, O&M, financing and PPA contracts often contain change-of-control clauses that require consent or allow termination. Buyers should identify these early, assess the leverage they give counterparties, and obtain consents before closing.

Warranty claims and disputes

Post-closing disputes in renewable transactions often concern permits that are later challenged in court, land rights that turn out to be defective, delays in grid connection or lower-than-expected production. The SPA should set clear time limits, de minimis thresholds and caps, and define the buyer's knowledge for disclosure purposes. Where the seller remains involved in development, the interface between warranty claims and claims under the development services agreement needs careful drafting. Arbitration is common in cross-border transactions and offers confidentiality.

Tax structuring

Beyond real estate transfer tax, tax structuring addresses trade tax allocation between municipalities, which follows special rules for wind and solar plants, interest deduction limits for shareholder loans, and the use of partnership structures. Trade tax allocation matters politically, since host municipalities benefit from it, and should be considered alongside payments under § 6 EEG.

Financing and post-closing integration

Project finance is the standard for renewable projects. Lenders take security over the SPV's shares, accounts, contracts and land rights, and their consent is usually needed for a change of ownership. In acquisitions, the buyer must either assume existing financing, which requires lender consent, or refinance. Financing documents also restrict distributions and require compliance with covenants that affect the buyer's business plan.

After closing, the buyer must update registrations, inform authorities and counterparties, and integrate the asset into its operations. For portfolios, harmonising O&M contracts and direct marketing arrangements can create value. Repowering of older wind farms – replacing turbines with fewer, more powerful ones – is another value lever, subject to permitting and land rights. Buyers of older wind farms should therefore check early whether existing land use agreements allow repowering and whether the site lies in an area designated for wind energy, since this affects both the permitting route and the long-term value of the asset.

How TRW & Co helps with renewable energy project M&A

We advise developers, utilities, infrastructure funds and strategic investors on renewable energy project transactions in Germany. We conduct legal due diligence on permits, land rights, grid connections and EEG entitlements, structure share and asset deals, draft and negotiate purchase agreements and development services agreements, handle merger control and FDI filings, and coordinate financing aspects. Our work connects with our corporate and M&A, renewables and EEG and infrastructure projects teams. Please contact us. This article is general information and not legal advice.