Italy’s Sanpaolo, EIB Ink Deal Expected to Unlock $8.7B in Wind Investments #ItalyFinance

The European Investment Bank (EIB) has committed a counter-guarantee of EUR 500 million ($546.7 million) for a financing package of up to EUR 1 billion ($1.1 billion) that will be offered by Italian bank Intesa Sanpaolo SPA to wind projects across the European Union.

The parties expect the deal to stimulate an estimated EUR 8 billion ($8.7 billion) in total investments to “back the supply chain and power grid interconnection for new wind farms projects across the European Union”, a joint statement said.

“Wind energy is central to European energy independence”, said EIB vice president Gelsomina Vigliotti. “Producers are facing challenges such as high costs, uncertain demand, slow permitting, supply chain bottlenecks and strong international competition. This agreement shows how the EIB’s risk-sharing instruments help overcome these difficulties and finance key projects for the green transition and the decarbonization of the European economy, while enhancing industrial competitiveness”.

The agreement counts toward the deployment of EUR 5 billion ($5.5 billion) in guarantees pledged by the EIB at COP28 last year to spur wind components manufacturing in the EU, the statement said. The EIB expects the commitment, announced December 13, 2023, to unlock EUR 80 billion ($87.5 billion) in wind energy investments and result in 32 gigawatts of additional installed wind generation capacity.

The EUR 5 billion is part of the EIB’s contribution to the European Wind Power Package. The European Wind Power Package lays out strategies from policy reform to investment promotion and skills development for the wind sector to help achieve the EU’s legislated target of raising the share of renewables in the bloc’s energy mix to 42.5 percent by 2030.

The EIB’s counter-guarantee for the guarantees earmarked by Sanpaolo marks the first time that the EU-funded bank is tapping into InvestEU, the bloc’s umbrella investment program, for a deployment of the EUR 5 billion package, according to the statement. In 2021 the EU adopted the InvestEU program, a budget guarantee of EUR 26.2 billion ($28.6 billion), to support economic recovery from the coronavirus pandemic and drive climate projects. At least 30 percent of InvestEU, which mobilizes both public and private investments, is allotted for EU climate action.

The agreement with Sanpaolo is the second rollout of the EUR 5 billion package, following the EIB’s counter-guarantee of EUR 500 million for Deutsche Bank AG. The Frankfurt, Germany-based bank has allocated EUR 1 billion in guarantees for new investments in wind farms across the EU.

The Deutsche Bank guarantees “will enable the manufacturers to receive advance payments as well as to provide performance guarantees when taking on new wind projects”, said a joint press release July 31.

“The guarantee scheme also 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”.

In October 2023, the European Council adopted the Renewable Energy Directive setting a goal to reach 45 percent of renewables in the EU energy mix by the end of the decade, 42.5 percent of which is binding while 2.5 percent is aspirational. The binding target has been raised from 32 percent.

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