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Any German politicians hoping private equity investors will cough up some of the billions needed to finance the shift to green energy should probably think again, if comments at an industry conference on Wednesday are anything to go by.

Speakers at the conference said renewable energy projects, vital if Germany is to achieve its goal of a sustainable shift away from nuclear power, were too bound by red tape to be an attractive destination for the huge sums which private equity firms allocate.

"If something is heavily subsidised and regulated, we keep our hands off of it," Ralf Huep, a manager at UK-based private equity fund Advent International, told the Private Equity 2012 conference organised by Handelsblatt newspaper.

Investment opportunities in general for private equity in Germany are bleak and unlikely to improve for at least 12 to 18 months, as the euro debt crisis rumbles on, Huep said. "The market has dried up. We are only seeing 15 to 20 percent of what we did in the good years."

Yet this is not making renewable energy investment more attractive.

Like Advent, private equity firm 3i, which focuses on medium-sized transactions, also sees renewable risks as too high.

"This is not a field where 3i will be romping around," said 3i's Germany head Ulf von Haacke. "It is an area where political opinions can change too quickly".

In the wake of the Fukushima nuclear disaster, Germany decided to phase out nuclear power completely by 2022, faster than originally planned. The reactors had provided 23 percent of its power supply in 2010.

FINANCING THE TRANSITION

In addition, Germany wants 35 percent of its electricity to come from renewable resources by 2020, compared with 20 percent now.

Questions remain over how to finance the transition, which HypoVereinsbank (HVB), a unit of Italy's UniCredit, has estimated will cost 335 billion euros ($418 billion).

Germany's public sector development bank KfW is expected to play a large role.

Insurance players like Allianz and Munich Re are keen to find long-term investments that can provide them predictable income similar to bonds, but these big investors also face uncertainties, particularly in offshore wind power technology.

Munich Re aims to plough 2.5 billion euros into renewable energy and 1.5 billion into infrastructure projects in the medium term.

Private equity investors have tended to shun regulated market segments, where they feel they pack less of a punch, but still see opportunities among suppliers.

"We would rather invest in turbine makers, which in my view could also be for the wind industry," von Haacke said.

Max Roemer, founding partner at small player Quadriga Capital, echoed that view. "We are not so keen to go into renewable energy," he said, adding that transmission and cooling systems were of more interest.

"We prefer companies that are making this type of equipment, which is needed both for renewable and traditional energies," Roemer said.

This article is ocpyrighted by Reuters