The discount rate, a key proxy for the cost of capital, remains a critical input for investors, lenders and developers when evaluating renewable energy M&A activity. It directly influences valuation outcomes and fair market pricing across operational, late-stage and development assets. Despite its importance, observable market evidence remains limited, requiring market participants to rely on professional judgement, transaction benchmarks and specialist valuation insight.
The report presents a comprehensive, data-led view of current market conditions by combining two complementary research streams. Given the limited transparency of transaction-level pricing, the report provides an important market-led perspective on how investors are currently benchmarking risk and return across renewable energy technologies and geographies. Observed transaction internal rates of return (IRRs) and implied costs of capital derived from comparable market activity remain important valuation reference points to support this.
Grant Thornton 2026 Renewable Energy Cost of Capital Survey
First, Grant Thornton conducted a global survey of leading investors, lenders and developers to capture prevailing expectations for discount rates applied to secondary-market renewable energy transactions. Respondents were asked what discount rates they would expect to apply to both levered and unlevered investments across a range of technologies, including ground-mounted solar photovoltaic, onshore wind, offshore wind and battery energy storage systems. The results shown relate to geography and technology combinations which presented a minimum number of responses to infer meaningful conclusions. Participants also provided commentary on key valuation assumptions, such as merchant risk premiums and co-location considerations.
Second, the report incorporates a detailed analysis of Clean Energy Pipeline’s transaction database, focusing on observed enterprise value per megawatt (EV/MW) metrics for commercial operations date and ready-to-build projects. This transaction dataset covers deals announced or completed during 2024 and 2025 and draws on publicly disclosed information, including sponsor announcements, lender communications and market disclosures, alongside selected private bilateral transactions, early-stage development trades and balance-sheet financings that are not publicly reported. Together, this approach is intended to provide a representative view of market values during the period under review.
The research covers countries that rank among the top 20 global markets for renewable energy investment over the 2024–2026 period and spans a broad range of mature and developing markets across Europe, Asia, Africa and the Americas. All survey data was collected prior to the onset of the Iran conflict in the Middle East and should be interpreted accordingly.
As an example; below we highlight our survey responses received for operational solar assets across the globe.
Global solar discount rates
Beside, we have included responses from one of the qualitative questions tackling a key area of debate – the merchant risk premia. Other areas explored, include value accretion assumptions for development assets and valuation approaches for co-located assets.
Merchant risk premia
What discount rate premium do youexpect to see, if any, for a fully merchant project compared to a project with contracted revenues?
Renewable energy assets form a distinct and evolving segment of the wider infrastructure asset class. Valuation approaches must reflect the specific risk-return characteristics associated with these investments, including revenue support mechanisms, merchant exposure, leverage structures, technology maturity, construction risk and operational performance variability. For operational and late-stage construction projects, income-based valuation techniques, most commonly discounted cash flow analysis, remain the prevailing approach. For earlier-stage development assets, where long-term cash flows are more uncertain, market-based valuation methods using EV/MW multiples are typically more appropriate, with adjustments made for development milestones and probability of success.
Set against a backdrop of sustained global investment driven by decarbonisation targets, electrification and energy security considerations, the renewable energy sector continues to attract significant capital deployment. Declining technology costs, improving operational performance and expanding merchant and hybrid revenue models continue to support transaction activity across wind, solar and storage assets. Looking ahead, investment in renewable energy infrastructure is expected to remain robust, underpinned by long-term policy objectives and the increasing integration of renewables into global power systems.
Further results on other technologies and qualitative responses to valuation approaches across the development lifecycle for renewable assets are detailed in our full report.
Get in touch with the team via the link to discuss the findings of our full report.
