EIB Extends €500M Counter-Guarantee to Deutsche Bank to Boost European wind industry

The EIB's counter-guarantees are designed to mitigate credit risks for commercial banks working with wind industry players.

The European Investment Bank (EIB) is rolling out a €5 billion initiative to support wind energy equipment manufacturers across Europe by extending a €500 million counter-guarantee to Deutsche Bank AG. This funding will enable Deutsche Bank to establish a portfolio of up to €1 billion in banking guarantees for new investments in wind farms within the EU.

This transaction marks the inaugural operation under the EIB's December 2023 plan to bolster the provision of commercial bank guarantees to the European wind industry. The initiative is part of the EU Wind Power Package, unveiled by the European Commission in October 2023, aimed at ensuring a robust and competitive wind energy supply chain across the Union. The package includes counter-guarantees to major sector lenders like Deutsche Bank.

"A rapid expansion of wind power is essential for decarbonising the economy," stated EIB Vice-President Nicola Beer. "Our partnership with Deutsche Bank is a significant step towards increasing renewable energy production in Europe and reducing the cost of sustainable energy. This initiative will also help safeguard and create jobs within the European wind industry."

The EIB's counter-guarantees are designed to mitigate credit risks for commercial banks working with wind industry players. This mechanism facilitates access to advance payment and performance guarantee lines, benefiting both banks and the industry. In this initial project, Deutsche Bank will use the EIB's support to offer banking guarantees to wind-energy manufacturers. These guarantees will allow manufacturers to receive advance payments and secure performance guarantees for new wind projects. Additionally, the scheme will enable manufacturers to prepay suppliers for various components in the wind value chain, including turbines, grid infrastructure, cables, and transformers.

The EIB-Deutsche Bank guarantee facility is expected to stimulate private investments of up to €8 billion.

Alexander von zur Muehlen, CEO of Asia Pacific, Europe, Middle East & Africa (EMEA) at Deutsche Bank, emphasized the significance of the partnership. "The scale and speed of the energy transition demand substantial investments and collateral requirements. Our agreement with the EIB provides crucial additional guarantee volumes for wind manufacturers, enabling them to secure and execute large projects. Public-private partnerships like this are vital for financing the success of both digital and sustainable transformations."

Despite being a success story for the EU, the wind-power sector faces challenges including uncertain demand, slow project permitting, supply chain bottlenecks, high inflation, commodity prices, and increased international competition. The EIB-Deutsche Bank contract exemplifies the use of risk-sharing instruments to address these challenges and ensure project financing for the green transition. The counter-guarantees will free up additional funds to meet the increased production demands necessary to accelerate wind energy deployment.

Wind energy is crucial for the EU to meet its renewable energy targets. To achieve a 45% renewable energy share by 2030, the EU needs to expand its installed wind capacity by 117 gigawatts (GW). The EIB's €5 billion initiative is expected to contribute to the construction of 32 GW of this capacity.

"There can be no successful clean energy transition without a strong clean tech manufacturing sector in the EU," said Maroš Šefčovič, Executive Vice-President for the European Green Deal. "This initiative will provide the necessary financial support to help the European wind sector thrive both domestically and internationally."

Kadri Simson, Commissioner for Energy, added, "Wind energy is pivotal for Europe's ambitious renewable energy goals. We must continue to support our equipment manufacturers to advance the green transition while staying competitive and creating green jobs. This timely initiative with the EIB is a crucial element of the European Wind Power Package, designed to unlock investments and boost the wind sector."