The wind energy sector is attracting new sources of capital that compensate for banks’ general reluctance to provide debt finance for projects, the European Wind Energy Association (EWEA) announced last week. A growing number of power companies with strong balance sheets are investing in wind energy and there is increasing interest from institutional investors, despite the financial crisis.
The sector expects to be among the first to emerge from the economic turmoil.
However, governments and the European Investment Bank must urgently establish loan guarantees to ease the banking liquidity squeeze and accelerate economic recovery.
The European wind energy market is less reliant on bank project finance than just three or four years ago as an increasing share of new installations are financed by institutional investors, infrastructure funds and from power company balance sheets.
“Whilst many sectors are struggling with falling demand for their products; the European wind power sector is not. Although the sector is doing well in attracting new sources of finance, EU governments should learn a lesson from the US recovery plan, which provides billions of dollars in loan guarantees to renewables. We need all channels of finance, including bank lending and export credits, to be wide open to meet demand,” said EWEA CEO Christian Kjaer at a press conference yesterday in Marseille.
MEP and rapporteur on the Renewable Energy Directive Claude Turmes, also speaking at the press briefing, reinforced this point, saying that more money from the EU recovery plan should be set aside for loan guarantees. “I welcome the proposal in the European Commission’s draft of the five billion euro EU recovery plan to co-finance offshore wind and the first parts of a European supergrid, but this is not enough. The Heads of State also have to address the difficulty being experienced by even the most dynamic economic sectors like wind in getting access to the necessary finance needed for their investments,” Turmes said. “They should follow the plans put forward by the European Parliament to dedicate parts of the economic recovery plan money to guarantee loans from the European Investment Bank or other banks to renewable projects with funds from the EU budget.