Germany: EIB and Commerzbank to boost Europe’s wind manufacturers

This article is published in association with European Investment Bank.

• EIB provides a €500 million counter-guarantee to Commerzbank.
• This project is part of the EIB`s €5 billion wind package to support construction of new windfarms in Europe.
• The EIB will support Commerzbank to issue advance and performance bonds of up to €1 billion to finance wind projects. 
• The deal is part of the EU Wind Power Package to accelerate the green energy transition in Europe

The European Investment Bank (EIB) is using again its €5 billion initiative to support manufacturers of wind-energy equipment in Europe by extending a €500 million counter-guarantee to Germany-based Commerzbank AG. The transaction will enable Commerzbank to set up a portfolio of up to €1 billion of banking guarantees for new investment in wind farms in the EU.  

The deal represents the second operation in Germany under the December 2023 EIB plan to  strengthen the provision of commercial bank guarantees for companies throughout the European wind industry. 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 Union. It foresees counter-guarantees to the sector’s main lenders, which include Commerzbank.

“Through our cooperation with Commerzbank we are promoting the European wind energy manufacturers and the whole wind energy supply chain”, EIB Vice-President Nicola Beer said. “On our path to net zero, we need to strengthen the European key industries to accelerate the decarbonization through innovation and know-how. With this project we safeguard jobs in a sustainable and competitive industry but also our competitiveness of a critical sector.” 

The EIB’s counter-guarantees under its €5 billion initiative 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, benefitting both the banks and the industry.

The project is backed by the EU’s InvestEU program. Without this support the EIB would not have been able to be involved to this extent.

In this project, Commerzbank 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 to provide performance guarantees when taking on new wind projects. The guarantee-scheme enables manufacturers to pay their suppliers in advance for the supply of wind farms and the related wind value chain components, which include turbines, grid connection infrastructure, cables and transformer stations.  

The combined EIB-Commerzbank €1 billion guarantee facility is estimated to initiate private investments of up to €8 billion.

“The acceleration as well as the overall magnitude of the energy transition requires massive investments but also entails significantly increased collateral and guarantee requirements. Our accord with the EIB provides us with the opportunity to broaden our strong support for clients from the wind energy industry”, said Tim Koenemann, Global Head of Green Infrastructure Finance, Commerzbank. “These kind of partnerships between public actors and the private sector will be a cornerstone in facilitating a timely and successful digital and sustainable transformation in Europe.”

While the wind-power sector has to date been an EU success story, challenges remain within the supply chain by uncertain demand, slow project-permitting, supply-chain bottlenecks, high inflation and commodity prices, as well as greater international competition.

The contract between EIB and Commerzbank is an example of using risk-sharing instruments to tackle such challenges and, by extension, ensure the financing of projects for the green transition. The counter-guarantees free up additional financing that can be used to meet the increased production required to accelerate the deployment of wind energy.

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 (GW), of which the EIB`s €5 billion initiative will enable building 32 GW.

Background information

The EIB Group is the long-term lending institution of the European Union. It finances sound investments that contribute to EU policy objectives and works closely with other EU institutions and bodies to advance shared priorities such as equitable growth and a just transition towards climate neutrality. The EIB Group signed a total of €88 billion in new financing in 2023, of which €8.6 billion in Germany.

All new projects financed by the EIB Group are in line with the Paris Agreement. Investments in fossil fuels that do not reduce CO2 emissions are not eligible for financial support. The EIB Group is on track to deliver on its commitment to support €1 trillion in climate action and environmental sustainability investment in the decade to 2030, as pledged in its Climate Bank Roadmap. Over half of the EIB Group’s annual financing signed supports projects that directly contribute to climate change mitigation and adaptation, and to a healthier environment.

The European Commission presented the European Wind Power Package in October 2023 to tackle the unique set of challenges faced by the wind sector, including insufficient and uncertain demand, slow and complex permitting, lack of access to raw materials and high inflation and commodity prices, among others. In a specific Action Plan, the Commission set out a set of initiatives concerning permitting, auction design, skills and access to finance to ensure that the clean energy transition goes hand-in-hand with industrial competitiveness and that wind power continues to be a European success story.

The InvestEU programme provides the European Union with crucial long-term funding by leveraging substantial private and public funds in support of a sustainable recovery. It also helps mobilise private investments for the European Union’s policy priorities, such as the European Green Deal and the digital transition. The InvestEU programme brings together under one roof the multitude of EU financial instruments currently available to support investment in the European Union, making funding for investment projects in Europe simpler, more efficient and more flexible. The programme consists of three components: the InvestEU Fund, the InvestEU Advisory Hub and the InvestEU Portal. The InvestEU Fund is implemented through financial partners that will invest in projects using the EU budget guarantee of €26.2 billion. The entire budget guarantee will back the investment projects of the implementing partners, increase their risk-bearing capacity and thus mobilise at least €372 billion in additional investment.

Commerzbank AG is the leading bank for the German Mittelstand and a strong partner for around 25,500 corporate client groups. In addition, it supports private and small-business customers in Germany with more than €400 billion assets under management. The Bank’s two Business Segments – Private and Small-Business Customers and Corporate Clients – offer a comprehensive portfolio of financial services. Commerzbank transacts approximately 30% of Germany’s foreign trade and is present internationally in more than 40 countries in the corporate clients’ business. The Bank focusses on the German Mittelstand, large corporates, and institutional clients. As part of its international business, Commerzbank supports clients with a business relationship to Germany, Austria, or Switzerland and companies operating in selected future-oriented industries. In the Private and Small-Business Customers segment, the Bank is at the side of its customers with its brands Commerzbank and comdirect: online and mobile, in the advisory centre, and personally in its branches. Its Polish subsidiary mBank S.A. is an innovative digital bank that serves approximately 5.7 million private and corporate customers, predominantly in Poland, as well as in the Czech Republic and Slovakia.