The EIB will implement a €500 million guarantee extension that will allow the German bank to create a portfolio of bank guarantees worth up to 1,000 kilos, which will be used for new investments in wind farms in the EU.
This agreement is the first step in the EIB’s plan to provide €5 billion in bank guarantees to wind component companies across the EU. This is part of a package of measures adopted by the European Commission in October 2023 to strengthen the EU wind energy supply chain.
The guarantee network set up by the EIB and Deutsche Bank
The programme includes a system of reciprocal guarantees between the EIB and the lending financial institutions, recently joined by Deutsche Bank. This counter-guarantee facility aims to share the credit risks incurred by commercial banks when dealing with wind energy players. The instrument facilitates access to advances, which benefits both banks and the wind energy sector.
In this first phase, Deutsche Bank will rely on the EIB to provide bank guarantees to wind turbine manufacturers. This will allow them not only to receive advances, but also to provide performance guarantees when they undertake new projects. The guarantee facility also allows manufacturers to pay their suppliers in advance for supplies needed for installations and components of the wind energy value chain: turbines, grid connection infrastructure, cables and transformer stations, among others.
It is estimated that the EUR 1 billion guarantee facility agreed between the EIB and Deutsche Bank could be multiplied in value eightfold through private investment.
The agreement between the EIB and Deutsche Bank sets up a reciprocal guarantee mechanism aimed at reducing the risks assumed by banks, making it easier for wind energy manufacturers to access financing.
Nicola Beer, Vice-President of the EIB, said: “The rapid expansion of wind energy is crucial for the decarbonisation of the economy. Together with Deutsche Bank, we are promoting the development of renewable energies in Europe and thus reducing the price of sustainable energy. The project will also help preserve and create jobs in a sustainable and competitive European industry.
Alexander von zur Muehlen, Managing Director for Asia Pacific, Europe, Middle East and Africa (MEA) and Germany, and Member of the Board of Directors of Deutsche Bank, commented on the operation in these terms: “The acceleration and overall scale of the energy transition require massive investments, but also a certain financial security.
“Our agreement with the EIB provides additional guarantees to manufacturers in the wind energy sector for the completion of a significant number of projects,” he concludes.
The right tools to meet the challenges of wind power
While the trajectory of the EU wind energy sector has been successful so far, challenges remain. These include demand uncertainty, slow approvals, supply chain bottlenecks, inflation and high raw material prices, which combined with international competition fierce, give an uncertain image of this renewable energy sector.
According to the companies, the agreement concluded between the EIB and Deutsche Bank aims to provide the sector with a solid foundation which will allow it to face these obstacles in a solvent manner. They anticipate that the reciprocal guarantee system put in place will free up considerable additional financing which can be used to increase production, thereby accelerating the deployment of wind energy.
The EUR 5 billion made available by the EIB for its matrix energy support program will, according to the agency’s estimates, enable the installation of 32 gigawatts (GW) of wind energy by 2030. This capacity represents almost a quarter of the 117 GW of renewable energy that the EU has set itself as a target to achieve. mix “green” energy by 45% by the end of the decade.
There can be no energy transition without a strong clean technology manufacturing sector in the EU.
Maroš Šefčovič, executive vice-president of Green Pact Europe.
There can be no energy transition without a strong clean technology manufacturing sector in the EU. This initiative will help the European wind sector access the financial support needed to continue to thrive both locally and globally,” said Maroš Šefčovič, Executive Vice President for the European Green Deal.
“Wind energy is essential for Europe to achieve its ambitious renewable energy target. For this, we must continue to support our equipment manufacturers to advance the green transition while the Union protects its competitiveness and ensures “green” jobs, added Kadri Simson, Energy Commissioner. “This timely joint EIB initiative is an important achievement in the EU’s policy to unlock investment and boost the sector. wind power.