Create financial capacity for renewable energies
The expansion of renewable energies is at the top of the political agenda. It is therefore certain that high investments will be necessary in the coming years. In order to be able to cover the necessary credit needs, many banks are already creating the financial leeway today. “This is done by outsourcing parts of the loan portfolio to external infrastructure debt funds,” says EDS founder and CEO Sebastian Bergmann.
Renewable energy infrastructure is already a highly sought-after asset class, especially for institutional investors. It offers a stable expected return, can be planned and the capital invested is not subject to fluctuations. The difficulty: Especially in the expansion of renewable energies, the widely lamented lengthy approval procedures prevent new projects from coming onto the market quickly. But this will change: “Politicians are currently doing everything they can to quickly increase the number of new projects,” says Bergmann. “We will soon see the knot burst here, and then many new wind farm or solar farm projects will rush onto the market.”
As the number of projects increases, so does the demand for loans. “Banks are already anticipating the future, seeing the strong increase in demand for loans and are positioning themselves accordingly,” says Bergmann. Because given the attractiveness of the asset class, the banks’ leeway has already been used. But this also means that financiers are already at regulatory or internal limits and cannot provide the loans that will soon be needed quickly enough. “At the moment we see a trend towards outsourcing loans or parts of loans to funds,” says Bergmann. “For financiers, this creates the necessary scope for additional lending.”
Infrastructure debt funds can play a big role as co-financiers in the future. “Today, existing loan portfolios are being offloaded to the funds,” says Peter Hoffmann, Co-Founder and CTO at EDS. “But it is to be expected that the demand for the funds will be high and that fresh money can also flow into the projects through them.” For some banks, this creates an additional business segment. “These infrastructure debt funds are an attractive product that is interesting for private as well as institutional clients and whose distribution also generates additional sources of revenue,” says Hoffmann. In this respect, it is to be expected that more and more such funds will be launched on the market in the coming years.