European banks continue play a growing role in renewable energy finance, according to the latest data.
Continent-wide, European banks have syndicated more than €100bn of loans for renewable energy projects since 2013. In a report for its clients, rating agency Moody’s said market trends suggest the European Union’s commitment to increase use of renewables will foster more investment in the sector.
The EU wants to increase the share of energy from renewable sources to at least 32% by 2030, from 17.5% in 2017. It estimates that about €180bn of additional investment is needed each year to meet its climate change goals.
Mathias Kuelpmann, Senior Vice President at Moody's, said recent developments bode well for renewable energy projects, with technological advances and declining capital equipment costs.
"Other encouraging developments include big tech companies seeking to procure up to 100% renewable energy; higher prices for electricity; and access to new, cheaper sources of funding."
Large European banks such as BNP Paribas and UniCredit report exposures between €8 billion and €12 billion to finance renewable energy transactions, representing more than 16% of their Common Equity Tier 1 (CET1) capital, Moody’s said.
The agency also noted that on a relative scale, renewables are an even more important asset class for some smaller or specialised German banks.
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