This agreement will allow Deutsche Bank to establish a portfolio of up to €1 billion in banking guarantees for new wind farm investments within the EU.
This transaction marks the first step under the EIB's December 2023 plan to allocate €5 billion to enhance the availability of commercial bank guarantees for companies in the European wind industry. This initiative is part of the EU Wind Power Package unveiled by the European Commission in October 2023, aiming to maintain a robust and competitive wind energy supply chain across the Union. The plan includes providing counter-guarantees to major lenders in the sector, such as Deutsche Bank.
EIB Vice-President Nicola Beer emphasized the importance of rapidly increasing wind power capacity for decarbonizing the economy. "Together with Deutsche Bank, we are fostering the growth of renewable energy in Europe, which will help reduce the cost of sustainable energy. This project will also support and create jobs in a sustainable and competitive European industry," Beer said.
The EIB's counter-guarantees are intended to mitigate the credit risks that commercial banks face when working with wind industry companies. This mechanism facilitates access to advance payment and performance guarantee lines, benefiting both the banks and the industry.
In this initial project, Deutsche Bank will leverage the EIB's support to offer banking guarantees to wind-energy manufacturers. This will enable these manufacturers to secure advance payments and provide performance guarantees for new wind projects. The scheme also allows manufacturers to prepay suppliers for wind farm components, including turbines, grid connection infrastructure, cables, and transformer stations.
The EIB-Deutsche Bank €1 billion guarantee facility is expected to stimulate private investments of up to €8 billion.
Alexander von zur Muehlen, CEO for Asia Pacific, Europe, Middle East & Africa (MEA), and Germany, and Member of the Management Board at Deutsche Bank, noted that significant investments, collateral, and guarantees are essential for the energy transition. He stated, "Our partnership with the EIB offers substantial additional guarantee volumes for wind manufacturers to secure and execute large-scale projects. Such public-private partnerships are crucial for financing the digital and sustainable transformation."
The wind power sector has been a success story for the EU, but it faces challenges such as uncertain demand, slow project-permitting processes, supply-chain bottlenecks, high inflation, and commodity prices, as well as increasing international competition.
The EIB-Deutsche Bank agreement exemplifies how risk-sharing instruments can address these challenges and ensure the financing of green transition projects. The counter-guarantees unlock additional funding needed to ramp up production and expedite the deployment of wind energy.
Wind energy is critical for achieving the EU's renewable energy goals. To reach a 45% renewable energy share by the decade's end, the EU must increase its installed wind capacity by 117 gigawatts (GW), with the EIB's €5 billion initiative contributing to the construction of 32 GW.
