EIB and Commerzbank to mobilise €2bn for grid investments in Europe

The intent of the cooperation is to address key financing bottlenecks for grid expansion and upgrades by strengthening supply chains for the grid components that are crucial for integrating renewables and advancing the energy transition. 

To achieve this, the European Investment Bank (EIB) is providing Commerzbank with a guarantee of €250 million, which in turn enables Commerzbank to offer more guarantees for manufacturers of components including cables, transformers and other equipment. 

In total the cooperation is expected to mobilise grid investments up to €2 billion. 

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Commented Neil Aiken, Divisional Board Member Lending at Commerzbank: “As a leading bank for German SMEs and a key energy industry partner, we see every day how large the investment and financing needs for grid infrastructure are.  

“The EIB guarantee strengthens our capacity to address these needs and helps ensure a secure, affordable and sustainable energy supply in Germany and across Europe.” 

EIB Vice‑President Nicola Beer adds that the partnership creates sorely needed room for manoeuvre in accelerating the expansion of Europe’s electricity grids. 

“Our cooperation with Commerzbank will support investments of up to €2 billion in new lines, transformers and smart infrastructure, make the energy supply more resilient, and help reduce energy costs for people and businesses in the long term.” 

The need for a sharp rise in investment in technologies for the grids going forward is well documented. 

In Germany as an example, by 2045 it is estimated that the grids will need an additional more than 0.5 million km of cables and transformers. Investment projections for the German electricity grids by 2045 total around €431 billion or around €20 billion per year – almost four times the amount in 2022. 

At the same time, operating costs are rising significantly due to grid bottlenecks and system interventions. In 2023 alone, more than 27,000GWh of electricity had to be balanced through redispatching, costing around €3.2 billion.  

EIB’s guarantee covers up to 50% of the risk arising from the standard performance and advance payment guarantees for equipment manufacturers. 

As Europe’s market for grid components is dominated by a handful of large OEMs and only a few banks offer such guarantees, institutions are increasingly running up against regulatory risk and concentration limits. 

By enabling Commerzbank to partly share out its risk exposure to OEMs, regulatory capital should be freed up and more guarantees provided for new lines, substations, transformers and cable connections in Germany and other member states for faster implementation of expansion projects. 

EIB grid package

The cooperation with Commerzbank is reported as the first transaction under the pan‑European EIB grid package, which is aimed to enable investments in numerous electricity grid projects across the EU. 

Each operation under this programme is intended to help mobilise additional grid investments of up to €4 billion, while also strengthening the industrial base for grid equipment in Europe. 

The package also builds on an existing initiative for the wind energy value chain, under which the EIB and partner institutions including Commerzbank are providing risk mitigation for wind turbine manufacturers. 

Alongside this cooperation, the EIB has announced €100 million to Malta to support the development of a second electricity interconnector with Italy. The 122km AC subsea electricity interconnector with a transmission capacity of 225MW is due to connect the Enemalta terminal station in Magħtab, Malta, to Terna’s substation at Contrada Cimillà in Ragusa, Sicily. Entry in operation is expected in Q1 2027.