An agreement to provide a €500m counter-guarantee for BNP Paribas adds to a growing list of similar pacts with European banks in support of the wind industry.
The European Investment Bank (EIB) has announced an agreement with BNP Paribas to provide guarantees to support investment in the European wind industry. It is the latest in a list of agreements with big European banks intended to help the EU meet its 2030 renewable energy targets.
Under the deal, the EIB is providing a €500m counter-guarantee that allows BNP Paribas to create a €1bn portfolio of bank guarantees in support of wind investments.
This follows on from similar agreements over recent months to provide €500m counter-guarantees for wind sector investment with several other European institutions. including Deutsche Bank, Societe Generale and, earlier in February, Santander. The EIB has said it hopes each of these guarantee agreements will unlock up to $8bn (€7.6bn) of investment in new wind farm projects, supply chain efficiency and improved grid interconnections.
Boosting the sector
The agreements are part of a €5bn EIB initiative to support the European Wind Power Package, launched by the European Commission in October 2023. The package is designed to help the sector overcome challenges including demand uncertainties, red tape, variable commodity prices and high inflation. It is backed by InvestEU, a wider EU programme seeking to mobilise investment of more than €372bn by 2027.
BNP Paribas said its agreement with the EIB would help it meet a commitment to support the energy transition through financing low-carbon energy, which the bank expects to account for at least 90% of its energy production financing by 2030.
“By supporting European corporates along the wind value chain, we believe our collective efforts will inspire innovation, foster sustainability and pave the way for a more robust Europe,” said Yannick Jung, head of global banking at BNP Paribas.
On announcing the EIB’s agreement with Santander, Gemma Feliciani, EIB director of Financial Institutions, said it allowed the two institutions to put in place de-risking instruments to allow manufacturers to overcome impacts such as supply chain disruptions, high costs or intense international competition.
Tackling an order backlog
Ricardo Gamazo of the Santander Global Trade Finance team said that the programme would be welcomed by his bank’s wind equipment industry clients, who are facing a large backlog of orders to meet growing demand.
“This in turn creates large guarantee issuance requirements and this extra capacity goes a long way in securing credit lines in the market. We believe this agreement is another decisive step in buttressing energy security for the EU in a sustainable fashion,” he said.
Funding generated by the EIB’s wind initiative is intended to pave the way for the addition of 32 gigawatts (GW) of the 117GW of wind capacity needed in total to enable the EU to meet its goal of generating at least 45% of its energy from renewable sources by 2030.
Getting to that target requires a substantial increase in wind farm construction, given new capacity built in EU countries during the first half of 2024 totalled just under 6GW, according to a report from industry association Wind Europe, published in September.
EU countries currently have around 225GW of wind capacity, contributing to total capacity across the continent, including non-EU member states, of 278GW, Wind Europe said. Around 243GW of that total is onshore and 34GW is offshore. The EIB has also been supporting the industry through more direct financing. In January, the institution signed an agreement to provide a €400m loan to support Polish utility PGE in the design and construction of Baltica 2, the EU’s largest offshore wind farm to date. The 1.5GW capacity farm, which will be located off the Polish coast in the Baltic Sea, is being developed by PGE and Denmark’s Ørsted.
