EIB and Danske Bank launch €500m wind-industry guarantee programme

The European Investment Bank has agreed to take up to €250m of risk on a Danske Bank guarantee portfolio, allowing the Danish lender to provide as much as €500m of bank guarantees to European wind manufacturers as they take on new turbine and equipment orders.

The agreement targets a financing constraint that appears before much of the physical work on a wind project begins. Manufacturers can be required to provide bank guarantees to buyers before starting production or delivering turbines and other equipment. Those contingent commitments consume banking capacity even though they are not conventional cash loans.

By sharing part of that risk, the EIB gives Danske additional capacity to issue guarantees without carrying the full exposure itself. The structure should therefore allow manufacturers and suppliers to support a larger pipeline of orders while reducing pressure on the guarantee limits available from their commercial bank.

The transaction was entered into by Danske Bank’s Corporate Loans Structured Export Finance team and covers companies across the European wind value chain. It is the first agreement of its kind with a financial intermediary in the Nordic region under the EU’s 2023 Wind Power Package and is backed by InvestEU.

For trade and working-capital finance, the distinction between a guarantee and direct funding is important. The EIB is not providing €500m of cash to turbine manufacturers. Instead, its €250m commitment supports Danske’s ability to issue up to €500m of guarantees attached to production and delivery obligations.

That can still have a material liquidity effect. Large equipment contracts can tie up banking lines for extended periods while manufacturers procure components, build equipment and meet contractual milestones. Expanding guarantee capacity can therefore help suppliers accept additional orders without the same constraint on other borrowing and working-capital facilities.

The agreement forms part of the EIB’s €6.5bn European Wind Power Package, which the bank expects to support 32GW of new capacity. The EIB says Europe needs another 117GW of wind capacity to reach the EU’s target of 45% renewable energy by 2030.

For Danske, the transaction turns public-sector risk sharing into additional trade-finance capacity at a point in the supply chain where financing requirements arise well before a wind farm starts generating revenue.