The European Investment Bank (EIB) Board of Directors has signed off on a €5bn counter-guarantee scheme to improve access to finance for wind turbine manufacturers.
The EIB scheme will provide counter-guarantees to commercial banks to support the risk they are taking by providing their own guarantees to wind energy projects.
The EIB expects it to support up to €80bn in new wind energy investment.
The EU is currently installing 16GW of new wind farms a year but needs to build 28GW a year to reach its 2030 climate and energy security targets.
This requires increasing volumes of permits and grid connections but it also means making it easier for wind turbine manufacturers to accept orders for new turbines.
Accepting orders involves taking out guarantees with commercial banks.
With growing volumes commercial banks are finding it harder to provide all the guarantees that are needed without counter-guarantees.
In October the European Commission presented its Wind Power Package to strengthen the competitiveness of Europe’s wind energy industry and a key element of this is improving access to finance and providing de-risking tools and guarantees through the EIB.
“It’s great the EIB is already delivering its actions from the Wind Power Package. The new counter-guarantees are crucial to our industry.
“They will improve access to finance and unlock investments in new wind farms and then factories,” said WindEurope CEO Giles Dickson.
Commercial banks typically provide a guarantee to cover the downpayments wind farm developers make to their equipment manufacturers when they place orders for new kit.
The developer is then entitled to payment if the manufacturer fails to meet its contractual obligations.
The new €5bn counter-guarantee scheme ensures that the risk for the issuing commercial bank does not lie with the manufacturer, but instead with a third party, which in this case will be the EIB.
This will allow the commercial banks to provide the increased volume of guarantees that are now required.
State guarantees, for example export credit guarantees, are common practice.
The counter-guarantees are not direct financial support to the wind industry, and the risk for the EIB is extremely limited.