Istanbul businessman Egemen Mustafa Şener breaks down the real risk inside a renewable energy investment

Renewable energy has become one of the easier sectors to raise money in. The story is clean, the numbers look favourable, and the sector tailwinds are real. What's harder is telling which specific projects will actually generate returns over a twenty-year horizon, and which will underperform at a pace slow enough that no one notices until the fund is already closed. Egemen Mustafa Şener, who added selective renewable investments to his portfolio in the 2020s after more than thirty years in construction, infrastructure and port investment, argues that the real risks inside a renewable deal sit in three specific places most pitches don't spend much time on.

Istanbul businessman Egemen Mustafa Şener on where the pitch stops matching the project

Start with the gap between promised generation and actual output. A solar or wind project is sold on a modelled production figure, which assumes particular sun hours, wind speeds, and equipment performance over time. The modelled figure is almost always optimistic by some margin. Panels degrade, wind patterns shift, and equipment downtime is almost always underestimated. Over a twenty-year project life, a five or ten percent shortfall against the model compounds into a materially different return profile than the one the investor committed to.

A serious investor asks for the project's assumptions about degradation, downtime, and weather variability, and then compares those assumptions against actual field data from comparable installations in the same geography. Pitches that can't produce that comparison, or that resist the question, are telling you something about the quality of the assumptions.

The political assumption nobody puts on the first slide

Next comes the political and regulatory gap. Renewable energy projects depend heavily on policies that didn't exist twenty years ago and may not exist in their current form twenty years from now. Feed-in tariffs, tax credits, renewable energy certificates, grid priority access: all of these shape project economics, and all of them are subject to political change.

A project sold on current policy conditions is implicitly betting that those conditions hold. In stable jurisdictions, that bet usually works out. In less stable ones it doesn't, and the failure rarely announces itself in advance. The screener's job is to work out what the project looks like economically if the current policy framework softens. A project that only works under present conditions is a riskier investment than its pitch suggests.

Where Şener weighs renewables against the rest of his portfolio

The last gap is time itself. Renewable energy projects typically have long payback periods, often ten to fifteen years before the investor sees meaningful return of capital. That timeline has to match the ownership structure that's funding it. A long-term family office or sovereign fund can comfortably hold a fifteen-year position. A closed-end fund with a seven-year life cannot, and projects structured for the former but sold to the latter create problems that only surface at exit.

"The payback period of a renewable energy project has to match the patience of the capital behind it. If those two things don't align, the project will get sold under pressure long before its actual value is realised, which usually means the original investor takes the loss and someone else collects the return," Egemen Mustafa Şener has observed of his own screening process.

This is the gap that caught many early renewable investors from the 2010s and continues to catch newer ones today. The project itself may be sound. The problem is the structural mismatch between how long the project needs to prove out and how long the capital was willing to wait.

The three-risk frame in practice

Taken together, these three risks (the gap between modelled and actual generation, the exposure to political and regulatory shifts, and the mismatch between project timeline and capital patience) explain why selective investment makes more sense than broad exposure.

Each renewable project has to be screened against all three before it earns a place in a serious long-term portfolio. The ones that pass all three are rarer than the sector's pitch materials suggest, which is exactly why Şener's own renewable positions are kept small and deliberate.