The European Investment Bank (EIB) is the “financial arm” of the European Union. Public bank, owned by the Member States, it invests in long term projects by providing loans. The Bank is notably active in support renewable energy projects, and established a clear set of Energy Lending Criteria to that end. These criteria are used by the bank to define whether it provides support to projects in the framework of EU facilities it may manage, such as the EFSI.
The European Fund for Strategic Investment is an initiative from the European Commission that aims to raise the level of investments in the EU. The objective is to unlock EUR 315 billion of new investments in riskier projects (according to the additionality principle). The scheme is based on risk guarantee, meaning that it would take “first loss” in case the project underperformed. This lowers their financial risk, which means lower financing costs for the projects.
As of 2017, the EFSI has supported projects for EUR 30.6 billion (or a total investment of EUR 163.9 billion), 22% of which in renewable energy or energy efficiency projects.
The EFSI is the most prominent example of the increasing financialization of EU public funding, which uses financial instruments to increase the amount of private capital leveraged from the same amount of public money. The European Investment Bank is at the core of this shift in EU fund allocation, managing most of these financial instruments in virtue of the financial expertise it possesses.
Geothermal projects may be eligible in one or several funding streams of the bank. Large projects may benefit from direct EIB loans. Smaller projects may be eligible to a financial instrument, such as those listed in the FI-Compass platform.
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