The European Investment Bank and Germany’s DZ BANK have agreed a risk-sharing deal that includes €500 million in EIB guarantees and could support up to €1.2 billion in additional lending for municipal utilities and network operators.
The funding is intended to back investment in energy, heating and water infrastructure by local providers, according to the EIB's announcement released on Wednesday.
The agreement was signed at a ceremony held at DZ BANK’s premises.
Investment needs for the energy and heating transition in Germany are expected to exceed €700 billion by 2030, based on estimates by the German Association of Energy and Water Industries (BDEW) and consultancy EY cited by the EIB.
Smaller and medium-sized utilities can face limited financing options and may struggle to meet requirements for raising money on capital markets, leaving them more reliant on bank loans.
How the guarantee works
The EIB guarantee covers up to 50 per cent of DZ BANK’s credit risk for each borrower, which can allow the bank to provide more loans and finance projects with larger amounts or longer repayment periods.
The initiative — known as Growth4Energy — focuses on expanding and modernising electricity distribution networks and district heating systems, as well as investment in water and wastewater infrastructure.
The guarantee is aimed particularly at local infrastructure projects with investment costs of up to €80 million.
Municipal utilities and network operators need to invest in networks, storage facilities and generation capacity to keep infrastructure aligned with the energy and heating transition, DZ BANK management board member Stefan Beismann said.
High energy prices are putting pressure on households and businesses, and the guarantee is intended to help raise additional funds for modernising networks and heating supply, EIB vice-president Nicola Beer pointed out.
