COMMERZBANK PAN-EU POWER GRID PACKAGE

The project will be implemented as an unfunded partial delegation linked risk-sharing ("LRS") transaction with the financial intermediary. It will enable new investment in the European power grid through counter-guarantees on advance payment and performance bonds, associated with supply contracts of manufacturers of power grid equipment in the InvestEU countries.

The objective is to support the expansion and enhancement of the EU power grid by increasing the capacity of the financial intermediaries to provide advance payment and performance bonds in relation to the supply of power-grid components.

The operation will contribute to the InvestEU objective of developing the energy sector and is structured as a guarantee line to the financial intermediary in order to cover part of its exposure to advance payment and performance bonds issued by the financial intermediary to cover risks born by promoters of power-grid related projects on supply contracts with component manufacturers (OEMs) based in or with manufacturing capacity in InvestEU countries.

The ambitious policy decarbonisation targets set in the EU towards 2030 require significant investment in renewable energy production capacity. The installation of such capacity needs to happen in parallel to an overall enhancement and an extension of the power-grid, so that the new renewable energy capacity can be fully integrated. This in turn requires a scale up of the supply chain, notably of the power-grid equipment manufacturing industry, so that it can deliver components, services, and materials in a timely manner. It also requires an increased access to advance payment and performance guarantee lines for the OEMs, in a context of commercial and financial pressure (growing order books) and with commercial banks reaching their exposure concentration limits vis-a-vis OEMs. The current situation in the guarantee market is exacerbated by the relatively limited number of EU commercial banks providing such demanded guarantees in the EU.

The operation, by providing additional guarantee capacity, is specifically addressing the increasing bottleneck associated with the provision of guarantees to OEMs, and will therefore enable additional investment in strategic Net-Zero technology deployment by power-grid OEM suppliers in the InvestEU countries. This enabling effect will help support the proper functioning and access to finance of the entire power-grid supply chain and will, in turn, contribute to deploy additional power-grid capacity that will be installed mainly in the EU and some of the other InvestEU countries.

The future of the European clean energy and decarbonisation effort is grid locked. As stated in the Draghi report, without a significant increase in grid capacity, Europe may face competitiveness limitations including in digitalising its production sector or providing businesses and households with access to clean energy solutions.

The operation would not have been carried out (to the same extent) by the EIB without the InvestEU support.

The proposed operation falls within the scope of the EIB's Environmental and Social Standards - "Standard 11 Intermediated Finance". The financial intermediary has adequate capacity, systems and processes in place for identifying, assessing, managing and monitoring environmental, climate and social (ECS) risks related to the potential sub-projects benefitting from EIB support. The final beneficiaries will be required to comply with applicable national and EU legislation in respect of environmental and social matters, as appropriate.

Final beneficiaries will be requested to comply with applicable national and EU legislation, as appropriate.