The European Investment Bank (EIB) is activating a €5 billion (US$5.47 billion) initiative to support manufacturers of wind energy equipment in Europe by extending a €500 million counter-guarantee to Deutsche Bank.

The transaction will enable German lender to set up a portfolio of up to €1 billion of banking guarantees for new investments in wind farms in the European Union.  

The deal represents the first operation under the December 2023 EIB plan to provide €5 billion to strengthen the provision of commercial bank guarantees for companies throughout the Europe’s wind energy sector.

The initiative is part of the EU Wind Power Package presented by the European Commission in October 2023 to maintain a healthy and competitive wind energy supply chain across the EU. It foresees counter-guarantees to the sector’s main lenders, which include Deutsche Bank.

“A quick build-up of wind power is crucial for decarbonizing the economy,” says EIB vice-president Nicola Beer. “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 project will also help to safeguard and create jobs in a sustainable and competitive European industry.”

Sharing credit risk

The EIB’s counter-guarantees under the €5 billion initiatives are designed to share credit risks faced by commercial banks when dealing with players in the wind industry. The instrument facilitates access to advance payment and performance guarantee lines, benefiting both the banks and the industry.

In this initial project, Deutsche Bank will use the EIB`s backing to provide banking guarantees to wind energy manufacturers. This will enable the manufacturers to receive advance payments as well as provide performance guarantees when taking on new wind projects.

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, including turbines, grid connection infrastructure, cables and transformer stations.  

The EIB-Deutsche Bank‘s €1 billion guarantee facility is expected to initiate private investments of up to €8 billion.

“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,” says Alexander von zur Muehlen, Deutsche Bank’s CEO for Asia-Pacific, EMEA and Germany and a member of its management board. "These partnerships between public actors and the private sector will be a cornerstone for financing the success of the digital and sustainable transformation.”

Wind energy will play a significant role in achieving the EU's renewable energy target. For the EU to achieve a 45% renewable energy share by the end of the decade, installed wind capacity will need to expand by 117 gigawatts, of which the EIB`s €5 billion initiative will enable building 32GW.