EIB to Shell Out $87B in Clean Energy Financing over 3 Years

The European Commission has adopted a new Clean Energy Investment Strategy under which the European Investment Bank (EIB) is expected to roll out EUR 75 billion ($86.56 billion) over the next three years.

The strategy focuses on unlocking greater private investment including by expanding access to capital markets for distribution and transmission operators, and derisking investment in clean energy generation technologies through public funding such as in the form of guarantees.

“While public funding plays a vital role as a catalyst, the energy transition will, first and foremost, require the mobilization of substantially more private capital”, the Commission said in an online statement. “By using public financing as a catalyst, we aim to de-risk projects, spread financing costs over time and attract a wider base of investors, including large-scale institutional capital”. 

According to the strategy, the European Union needs to raise investment to around EUR 660 billion annually between 2026 and 2030 and EUR 695 billion annually between 2021 and 2040 to meet its energy transition objectives while safeguarding consumers from high costs.

“This is a substantial increase compared to the EUR 240 billion annual average observed between 2011 and 2021”, the Commission said in the text of the strategy. “These investments need to include supply side (generation), demand (energy efficiency) and infrastructure (grids)”.

Support for Grid Operators

To help distribution and transmission system operators fund massive infrastructure projects without endangering their credit attractiveness, a new equity platform called the Strategic Infrastructure Investment Fund (SII Fund) will be formed.

With up to EUR 500 million of EIB commitment, the SII Fund will facilitate “targeted co-investment alongside infrastructure funds”, the text said.

“Co-investments allow for targeted support to those projects or companies that lack funding or struggle to raise sufficient capital to complete their investment plans”, it said.

The Commission and the EIB also intend to launch an Operator Securitization Facility (OSF) to tap “off-balance sheet financing structures that could convert future regulated revenue streams into immediate liquidity”.

“The primary objective is to assess how institutional capital can be effectively mobilized while ensuring that physical assets remain under public ownership”, the text stated. “By aligning financing durations with the long lifecycle of grid assets, the OSF could help mitigate refinancing risks and lower the total cost of capital, supporting grid development without placing undue pressure on energy tariffs”.

“While large-scale grid operators may utilize standalone issuances, the facility is also open to exploring pooling together different grid operators as one potential option among others, particularly for smaller entities”, the text said.

The strategy also aims to free up banks’ lending capacity and ultimately make more loans available for smaller grid operators “without direct reliance on public subsidies or state budgets”.

“The goal is to incentivize commercial banks to grant new loans to grid operators, including by providing support to promote securitization of existing loan portfolios, in compliance with the EU securitization framework, so that the participant banks use the freed-up balance sheet capacity to extend new loans to grid operators”, the text said.

Cleantech

The strategy also aims to maximize deployment from established and recently launched funding platforms to encourage greater private investment in emerging technologies.

Targeted technologies include long-duration energy storage, floating wind, floating solar, ocean energy (wave and tidal), airborne wind energy, agrivoltaics, advanced bio-based renewables and carbon capture.

The EIB will also offer venture debt and other financial products to derisk investment in small modular reactors. The Commission concurrently adopted a separate policy and investment strategy to help realize SMR deployment by the early 2030s.

To contact the author, email jov.onsat@rigzone.com

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.