EIB is making quick progress on counter-guarantee facility – total of €2bn provided so far.

22 January 2025

EIB is making quick progress on counter-guarantee facility - total of €2bn provided so far.

A lot has happened since the European Investment Bank (EIB) activated the first tranche of its €5bn counter guarantee facility. In January 2025 the EIB and Société Générale signed an agreement that would unlock up to €8bn to support European wind energy manufacturers. It's the fourth overall tranche provided by the EIB and follows similar announcements with Deutsche Bank, Commerzbank, and Intesa Sanpaolo. The total amount of counter-guarantees provided to European banks so far now stands at €2bn.

The EIB and Société Générale have announced a new initiative to support wind energy manufacturers in Europe. Under the agreement, the EIB will provide a €500m counter-guarantee to Société Générale. The French Bank will use this to create a portfolio of bank guarantees of up to €1bn. These guarantees will mobilise additional financing and funding from other investors to support new wind farm projects across the European Union, their supply chains, and power grid interconnection. It is estimated that the initiative could unlock a total investment of up to €8bn.

It's the first time the EIB has provided a tranche to a French bank. The operation is backed by InvestEU, the EU programme aiming to mobilise investment of more than €372 billion by 2027.

The deal forms part of the EIB's €5bn counter guarantee facility which was a key action point under the Wind Power Action Plan presented in October 2023. The EIB's wind-focused programme aims to support the production of 32GW of wind energy capacity, mostly through risk-sharing instruments.

It's good for the wind industry: Wind industry manufacturers will receive advance payment and performance guarantees under the scheme which will assist in strengthening Europe's supply chain. This will help ensure the timely financing of wind energy projects and accelerate the much-needed expansion of wind energy in Europe. It's an important step towards strengthening Europe's energy security and ensuring its industrial competitiveness.

"The continued deployment of the counter-guarantee scheme is a vital step in supporting Europe's wind manufacturing industry. It clearly demonstrates the commitment of the European Commission and the EIB to ensuring Europe can produce the wind turbines it needs. However, to truly maximise its impact, the scheme should also include warranty bonds which cover projects during construction and operation. Without them, manufacturers still need to secure separate guarantees from other sources which adds unnecessary complexity. Simplifying this process would make a big difference," said Phil Cole, Director of Industrial Affairs at WindEurope.

Fourth tranche of counter-guarantees provided

The agreement with Societe Generale was the fourth tranche of counter-guarantees provided by the EIB. It follows similar announcements with Deutsche Bank (Germany) Commerzbank (Germany) and Intesa (Italy). Each of the banks received €500million in counter-guarantees. This brings the total amount of counter-guarantees the EIB provided so far to €2bn.

Background: how do counter-guarantees help?

Commercial banks typically provide a guarantee to cover the down payments wind farm developers make to their equipment manufacturers when they place orders for new kit. The developer is then entitled to payment if the manufacturer fails to meet its contractual obligations.

With the growing demand for new wind turbines commercial banks are being asked to increase the volume of the guarantee lines they provide. But they're getting to the limit of what they can offer. Without counter-guarantees, the industry risks having to refuse what would otherwise be commercially viable orders for turbines that Europe needs.

This is where the EIB comes in. The €5bn counter-guarantee scheme ensures that the risk for the issuing commercial bank does not lie with the manufacturer, but instead with a third party, which in this case will be the EIB. This will allow the commercial banks to provide the increased volume of guarantees that are now required. This approach is nothing new. State guarantees, for example export credit guarantees, are common practice.

The counter-guarantees are not direct financial support to the wind industry, and the risk for the EIB is extremely limited. Guarantees are very rarely called in: study for the period 2016 to 2020, an International Chamber of Commerce study for 2016-20 found that only 0.2% of the total guarantees issued are called in.