How the EIB takes the risk in offshore wind financing
This is a feature of Windpower Monthly June 2021 issue. Click here to read the full edition
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The European Investment Bank (EIB) played a key role in starting offshore wind power in Europe, assuming funding risks that many commercial banks were unwilling to take on at the start. Today, the European Union’s lending arm is planning to do the same for floating offshore wind technology, said Alessandro Boschi, head of the EIB’s renewable energy division.
Since 2003, the EIB has provided around EUR 10 billion to support the construction of 9 GW of offshore wind farms in Europe, equivalent to more than a third of current capacity. It continues to finance traditional offshore wind farms, but its contribution has become relatively smaller as financing offshore wind has become routine for many commercial banks.
“We believe that we will play a similar role in getting floating offshore wind off the ground and making it cheaper and more competitive, as well as supporting the creation of a supply chain,” said Boschi. âThe potential is huge for this technology and, with the economies of scale, the costs will come down. Floating offshore wind farms are expected to play a very important role after 2030, he expects.
In 2018, the EIB granted a loan of â¬ 60 million under the InnovFin Energy Demonstration Project program for the 25MW WindFloat Atlantic WindFloat Atlantic (25MW) Offshoreoff Viana do Castelo, Portugal, Europe Click to see all the details pilot, sponsored by the Portuguese company Windplus in Viana do Castelo, off Portugal. This project was commissioned in July 2020 and was the world’s first floating offshore wind farm financed by a bank.
The EIB also approved the financing of Engie and EDP 30MW Gulf of Lion (Leucate) Gulf of Lion (Leucate) (30MW) Offshoreoff Leucate, Occitanie, France, Europe Click to see all the details (EFGL) and the 30MW EolMed (Le Gruissan) EolMed (Le Gruissan) (30MW) Offshoreoff Gruissan, Languedoc-Roussillon, France, Europe Click to see all the details floating project sponsored by Quadran Energies Marines. Both sites are located off the French Mediterranean coast.
Apart from floating wind, the EIB focuses on the less developed wind markets of the ten EU Member States in Central and Eastern Europe (CEEC). âMost of these countries have come from a system that is more based on fossil fuels, so they require greater investments for the energy transition,â explains Boschi.
“We are engaging with EU Member States, and in particular those in the East, on their National Energy and Climate Plans (NECP), and discussing ways to support the energy transition,” he said. -he declares. “Many of these countries need to be more ambitious with their decarbonisation and renewable energy targets, and also support the energy transition with adequate regulatory frameworks, which is not always the case at present.”
Poland, the largest economy in the Central and Eastern European region and still heavily dependent on coal energy, has been one of the main beneficiaries of EIB funds. Over the past three years, the bank has signed three loans for Polish wind farms, funding state-owned energy group PGE, German developer Wpd and Pomerania Wind Farm, a subsidiary of Lithuanian Ignitis Renewables.
In terms of new technologies, the EIB is also âlooking very closelyâ at green hydrogen. âThis has the potential to be a game-changer for decarbonization,â says Boschi, especially in hard-to-decarbonize industries and certain transportation segments.
Historically, the EIB has invested 1 to 2 billion euros per year in wind power. This figure is likely to rise, however, in light of the faster deployment of new wind capacity and other renewables required by the EU’s more ambitious emissions reduction commitments. âThere is a huge investment challenge, and we are ready to do our part,â he says.