€43bn into wind energy

Europe invested €43bn in new wind farms in 2020, the second highest annual amount on record, with the investments covering 20 GW of new capacity that will be built in the coming years, 13 GW of it in the EU.

The UK accounted for €13bn of the €43bn investments, the Netherlands €8bn, France €6.5bn and Germany €4.3bn. Germany and France invested the most in onshore wind. France also financed its second and third offshore wind farm. Turkey was the 5th biggest investor with €1.6bn, Poland 6th with €1.6bn.

Of the investment, €17bn was for onshore wind, covering 13 GW of new capacity. €26bn was for offshore wind, covering 7 GW of new capacity. Large projects boosted the offshore numbers, including Dogger Bank in the UK which will be Europe’s largest wind farm when completed and Hollandse Kust Zuid in the Netherlands.

“Wind energy remained an attractive investment despite the pandemic. Given the right revenue stabilisation mechanisms are in place, there is plenty of capital available to finance wind. This confirms wind energy is perfectly positioned to support Europe’s economic recovery from COVID. Each new turbine generates €10m of economic activity in Europe. And the expansion of wind energy envisaged in the National Energy and Climate Plans can create 150,000 new jobs by 2030”, said Giles Dickson, WindEurope CEO.

Wind farms continue to be financed with 70-90 per cent debt and 10-30 per centequity. Bank finance remains crucial, and more and more of it is project-specific rather than corporate debt, especially in offshore wind. The bigger wind farms are increasingly being turned into business entities with their own management teams and financial reporting, capable of raising debt on their own. Banks lent a record €21bn of non-recourse debt to new wind farms in 2020.

Another important trend is the growing role of corporate renewable Power Purchase Agreements (PPA) in supporting the financing of wind farms. Corporate and industrial energy consumers are increasingly keen to source power directly from wind farms. 2020 saw 24 new wind energy PPAs covering more than 2 GW of capacity, signed across a range of sectors including chemicals, pharmaceuticals, telecoms and ICT. PPAs provide stable long-term revenues for wind. They make it easier to raise debt at low interest. The same applies to the Contracts for Difference (CfDs) which Governments increasingly offer in their wind energy auctions: as revenue stabilisation mechanisms, CfDs reduce financing costs and therefore reduce the total costs of wind energy.

But the investment is still less than Europe needs to deliver its 2030 climate and energy goals. The EU needs to build 27 GW of new wind energy a year to deliver its new 55 per cent emission reduction target.

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