The European Investment Bank (EIB) and Commerzbank have signed a new cooperation agreement designed to enable up to €2 billion of investment in electricity grids in Germany and other EU countries.
The agreement was signed at Hannover Messe on 21 April, the EIB announced.
Under the cooperation, the EIB will provide Commerzbank with a €250 million guarantee, which the bank said would allow it to offer more guarantees to manufacturers supplying grid components such as cables and transformers.
Those manufacturer guarantees are commonly used in grid construction to protect grid operators and developers if a supplier fails to deliver a project or deliver against an advance payment.
Neil Aiken, a divisional board member for lending at Commerzbank, said the EIB backing would increase the bank’s capacity to support grid infrastructure investment.
Grid expansion and equipment supply chains
The EIB said the arrangement is intended to ease financing bottlenecks linked to grid upgrades and expansion, including constraints in supply chains for equipment.
Grid operators are expecting a sharp rise in investment needs for expansion by 2030, with most anticipating substantially higher spending.
Germany’s grids are estimated to need more than half a million additional kilometres of cables and transformers by 2045, with investment projections for German electricity grids totalling around €431 billion by that date — about €20 billion a year and almost four times the amount in 2022.
Operating costs are also rising because of grid bottlenecks and system interventions, the EIB said, adding that in 2023 more than 27,000 GWh of electricity had to be balanced through “redispatching” — a measure used by grid operators to adjust power generation to keep the system stable — at a cost of around €3.2 billion.
The cooperation with Commerzbank is the first transaction under the EIB’s new pan-European “Grid Package.EIB-Commerzbank deal targets grid bottlenecks as investment needs quadruple by 2045.”
