EIB Rolls Out $5.5B Support Package for Wind Components Manufacturing

The European Investment Bank (EIB) has activated a EUR 5 billion ($5.5 billion) package that backs investments in the production of wind farm components in the European Union by extending a EUR 500 million ($547.7 million) counter-guarantee to Deutsche Bank AG.

The EUR 5 billion package of counter-guarantees was approved December 13, 2023, as part of the bank’s contribution to the European Wind Power Package. The European Wind Power Package lays out strategies from policy reform to investment promotion and skills development for the wind sector to help achieve the EU’s mandated target of raising the share of renewables in the bloc’s energy mix to 42.5 percent by 2030.

The first rollout of the EIB counter-guarantees through the Frankfurt, Germany-based bank “will enable Deutsche Bank to set up a portfolio of up to €1 billion [$1.1 billion] of banking guarantees for new investment in wind farms in the EU”, the banks said in a joint statement.

Expected to unlock total investments of up to EUR 8 billion ($8.8 billion), the Deutsche Bank guarantees “will enable the manufacturers to receive advance payments as well as to provide performance guarantees when taking on new wind projects”, they said.

“The guarantee scheme also enables manufacturers to pay their suppliers in advance for the supply of wind farms and the related wind value chain components, which include turbines, grid connection infrastructure, cables and transformer stations”.

“While the wind-power sector has to date been an EU success story, challenges remain within the supply chain by uncertain demand, slow project-permitting, supply-chain bottlenecks, high inflation and commodity prices, as well as greater international competition”, the banks said.

“The counter-guarantees free up additional financing that can be used to meet the increased production required to accelerate the deployment of wind energy”, they said.

The EIB expects its EUR 5 billion counter-guarantees to unlock up to EUR 80 billion ($87.6 billion) of wind energy investments and enable 32 gigawatts (GW) of the 117 GW that the EU needs to add to its installed wind capacity to meet renewable energy targets. The counter-guarantees also support the manufacturing of grid interconnection equipment, according to the announcement of the package late last year.

Alexander von zur Muehlen, Deutsche Bank chief executive for Germany, Asia-Pacific, Europe, the Middle East and Africa, commented, “The acceleration as well as the overall magnitude of the energy transition require massive investments but also collateral and guarantee requirements”.

“Our accord with the EIB provides tangible additional guarantee volumes for wind manufacturers to win and perform the substantial amount projects”, von zur Muehlen added.

EIB vice president Nicola Beer said, “Together with Deutsche Bank, we are promoting the expansion of renewable energy in Europe and in that way bringing the price of sustainable energy down”.

“The respective projects will also help to safeguard and create jobs in a sustainable and competitive European industry”, Beer added.

Last October 9, 2023, the European Council adopted the Renewable Energy Directive setting a goal to reach 45 percent of renewables in the EU energy mix by the end of the decade, 42.5 percent of which is binding while 2.5 percent is aspirational. The binding target has been raised from 32 percent.

Qualified as renewable energy under the directive are, as enumerated in the text of the directive, “wind, solar (solar thermal and solar photovoltaic) and geothermal energy, osmotic energy, ambient energy, tide, wave and other ocean energy, hydropower, biomass, landfill gas, sewage treatment plant gas, and biogas”.

Toward the goal, “Member States shall set an indicative target for innovative renewable energy technology of at least 5 percent of newly installed renewable energy capacity by 2030”, the directive says.

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