Thursday, February 12, 2009

Europe's big lenders still backing green power

By Pete Harrison


BRUSSELS (Reuters) - The credit crunch is starting  to make an impact on smaller European green energy projects, but cash-rich utilities and the bigger lending institutions will continue to get deals done, green power experts say.

"The main problem for the smaller developers is the short-term freeze on lending," said Christian Kjaer of the European Wind Energy Association (EWEA), adding that the credit crunch could lead to consolidation in the sector.

"We may see some of the smaller projects which have turbine delivery contracts but are struck by the banking liquidity freeze being taken over by the larger power companies," he said.

Many foreign-owned banks have withdrawn from funding renewable energy projects in Britain, said Richard Simon-Lewis, director of project finance for energy and utilities at Lloyds TSB Corporate Markets.

"A lot of deals are being done by clubs of banks," he added. "For the very big deals ... we are seeing the multilaterals, the likes of the European Investment Bank and potentially the government coming in to co-fund."

Juan Alario, who heads the EIB's energy lending team, said the bank was considering lending to a large number of big offshore wind projects in the North Sea and Baltic Sea, some worth more than 1 billion euros ($1.3 billion).

A ring of giant wind turbines connected by underwater cables is a central part of the European Commission's plan for bolstering energy security and curbing unreliable imports of fossil fuels.

Europe's big lenders still backing green power

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