Europe’s Cleantech Investment Moment: Financing the Whole Value Chain

Co-written by Isabella Rova, Director of Finance at Brightsmith

Investment in European cleantech is moving from isolated technologies to coordinated system building. Capital is flowing into generation, conversion, storage, grids and flexibility, guided by governments aiming to secure industrial resilience and long-term energy security.

Grids First: The Foundation of the Transition

Electricity grids have become the starting point for every other euro of clean energy investment. The European Commission estimates that Europe will need around €584 billion in grid upgrades by 2030, with most of this at the distribution level. The EU’s Grid Action Plan targets faster permitting, digitalisation and cross-border interconnection. These upgrades are critical to unlocking renewable generation, battery storage and hydrogen offtake at scale.

Auctions Regain Momentum

After a period of stalled projects, clean energy tenders are recovering across Europe. Governments awarded a record 36.8 GW of new wind capacity in 2024, about one third more than the year before, according to WindEurope. Offshore projects dominated, supported by improved supply-chain visibility and stronger pricing frameworks. BloombergNEF reports that clean energy investment across the EU-27 rose sharply in early 2025 as developers redirected capital toward markets with clear and stable policies.

This shift signals that investors are prioritising policy certainty and predictable returns over early-stage speculation.

Storage and Flexibility Move Centre Stage

Energy storage is now one of Europe’s fastest-growing cleantech segments. Around 22 GWh of new capacity was added in 2024, expanding the installed base to 61 GWh. Italy’s first dedicated storage auction in 2025 awarded all 10 GWh of capacity on 15-year contracts and drew more than €1 billion of investment, four times the amount offered.

Institutional capital is following. Long-term investors view grid-scale batteries, pumped hydro and flexibility assets as stable infrastructure plays. As renewable generation increases, these assets ensure that clean power flows reliably through the system.

Hydrogen and Carbon Capture Mature

Hydrogen and carbon capture continue to evolve from demonstration to delivery. Europe now counts more than 200 active hydrogen projects, with Germany, the Netherlands and the Nordics leading development. The European Hydrogen Bank has completed two competitive auctions, awarding nearly €1 billion across 15 projects in five countries and introducing resilience criteria to strengthen domestic supply chains.

Carbon management is following a similar path. The Net-Zero Industry Act set a binding target of 50 million tonnes of CO₂ injection capacity by 2030, backed by the Innovation Fund, which now manages over €7 billion in industrial decarbonisation, hydrogen and storage commitments.

Hydrogen Investment Demands Patience

Large hydrogen projects require patient capital and complex coordination. Many still lack confirmed offtake, grid access or subsidy clarity. Hydrogen Europe reports that most announced capacity remains at early-stage planning rather than bank-financing readiness. The International Energy Agency estimates global low-emissions hydrogen production at below one million tonnes in 2023, with few projects reaching final investment decision.

Investors are adjusting their strategies. Capital is shifting from speculative, long-tail ventures to projects with strong policy support, secured demand and modular rollout potential. Regional hydrogen hubs, industrial clusters and conversion facilities that can scale incrementally are attracting the most interest. Timing, offtake certainty and regulatory alignment are now as important as technology maturity.

Investor Confidence and the Role of Government

Private capital is increasingly unwilling to move without firm policy backing. A recent European Central Bank study concluded that “public funding sources of green investment in the EU will be vital to complement and de-risk private green investment.” Projects without subsidy frameworks or government guarantees are widely viewed as unbankable, with developers in several large tenders calling unsubsidised bids “non-viable.”

This reliance on state support is reshaping deal flow. Investors are concentrating on government-backed mechanisms such as carbon contracts for difference, national hydrogen banks and the Innovation Fund. Policy clarity and public participation have become essential conditions for unlocking private capital.

Policy Alignment Brings Cohesion

The Green Deal Industrial Plan and Net-Zero Industry Act are embedding system-wide thinking into European policy. Their shared aim is to streamline permitting, boost manufacturing and direct funding toward domestic production of clean technologies. The EU now targets 40 percent of annual deployment needs to be met by local production by 2030.

This coherence is building investor confidence. Developers can plan integrated portfolios with fewer regulatory contradictions, and cross-border infrastructure is receiving coordinated support through the Connecting Europe Facility and relaxed state-aid rules.

Financing has followed the same logic. Grid modernisation attracts long-term infrastructure funds; storage and hydrogen projects are supported by national auctions; carbon management draws from both the Innovation Fund and private-equity capital; and renewable developers increasingly pursue multi-technology portfolios.

Integration as the New Investment Model

Europe’s cleantech story is becoming one of integration rather than isolation. Investors, developers and policymakers recognise that system strength matters more than single-technology speed. Grids, storage, hydrogen and carbon management are not competing for capital but forming the connective framework of a self-sustaining clean energy economy.

The next phase of growth will reward collaboration, cross-sector partnerships and investors who align with these long-term system trends. As public and private finance converge, resilience is emerging as Europe’s defining competitive advantage.

Isabella Rova is a Director at Brightsmith, specialising in impact and sustainable finance. She partners with leading venture and private capital investors to deliver the leadership talent driving climate innovation and the transition to a net-zero economy. With expertise spanning investment strategy, portfolio growth, and capital deployment, Isabella helps build the teams shaping the future of sustainable finance and transition infrastructure.