FRANKFURT – The European Investment Bank (EIB) will provide a 500 million euros ($540 million) guarantee to Deutsche Bank (NYSE: DB) to help the lender support Europe’s wind power industry, the two organizations and the European Commission said on Wednesday.
The so-called counter-guarantee is the first in a 5 billion euro initiative mapped out by the European Union’s development bank in December to boost wind power capacity in the bloc.
That came after the Commission presented a package to enlist commercial banks’ support for increasing the roll-out of renewable energy to help meet climate policies and improve energy security in the wake of Russia’s invasion of Ukraine.
Counter-guarantees are promises to cover losses if a borrower defaults on a loan.
The EIB’s move is designed to enable Deutsche Bank (NYSE: DB) to set up a portfolio of up to 1 billion euros of guarantees for wind generation and grid connection investments.
The 1 billion euro portfolio is expected to spur up to 8 billion euros of investments by companies or individuals, the three organizations said in a joint statement.
Wind equipment makers face challenges including uncertain demand, slow project permitting, supply-chain bottlenecks, high inflation, and commodity prices.
Chinese rivals are also expanding in the EU with low-priced products.
The EIB’s 5 billion euro initiative could support the building of 32 gigawatts (GW) of new wind capacity, contributing towards an EU target for 117 GW of new capacity by 2030.
($1 = 0.9246 euros)
(Source: ReutersReuters)
