The EU Commission has announced funding of €2.3bn for 31 gas and 12 electricity projects, the remains of the €4bn economic recovery fund, created in 2008 in response to the economic crisis.
"Never before has the Commission agreed such an important amount for energy projects.” said Günther Oettinger, EU Energy Commissioner. “We have selected key projects which will help create a more integrated energy network in Europe”.
The funding comes at a critical time for these projects, which are seen by the EU as strategic to its energy and climate objectives but still lacked access to sufficient funding. The EU will fund up to 50% of total project costs, leaving the rest to be leveraged on a national and private level.
The announcement comes after the initial €1.5bn of recovery money allocation to 15 carbon capture and storage (CCS) and off-shore wind projects in December 2009. These sectors require large and risky investments, the bold financial moves by the EU have been taken to give confidence to market players that the projects remain on track.
How this announcement will be received by the renewable energy sector remains to be seen, where financing has been the major constraint since last year.
According to SENER, “If there is a real political will to achieve the 20/20 target, some additional efforts need to be made going forward in terms of guarantees, public funds availability etc. in order to make liquidity much more available to projects.”
In a statement released to the European Future Energy Forum, spokes person for the EU Energy Commissioner, Marlene Holzner, said about Europe 2020 targets “No Member State whatever its size or its relative position can tackle on its own such challenges in a global context. It is not about transferring more powers to Brussels. This is about all of us moving in the same direction.”
The ambitious 20/20 targets, required by the Promotion of Renewable Energy directive, means 20% of EU gross final energy consumption to come from renewable sources by 2020. Hotly anticipated are the member states national action plans, due on June 30th detailing their individual policies for achieving their quotas under the directive.
Funding will be a central topic of discussion at the European Future Energy Forum to be held 19-21 October in London this year. With a keynote session on the first day asking ‘Where is the money coming from to fund the new energy revolution?’, delegates can expect top-level politicians, decision makers and investors engaging in real dialogue to address the challenges facing this industry.
A panel debate will provide an opportunity for investors to communicate what kind of regulatory environment is truly commercially relevant to them, as well as giving policy makers the chance to discuss their visions on developing the low carbon energy supply we need.
Kirsty Hamilton, Associate Fellow, Renewable Energy Finance at Chatham House will also chair a Finance session examining policy, risk and investment. Finance panel members will be looking at how to calculate and compare risks in renewable projects, models and methodologies for costing projects, structuring risk to attract investment and creating effective incentives.